Morocco to Start Capping Fuel Prices by Mid-March, Minister Says

(Bloomberg) -- Morocco will start intervening to limit fuel prices from March as the margins of fuel distributors such as Vivo Energy and Total Maroc come under scrutiny following nationwide protests last year.

“The capping mechanism is coming,” General Affairs and Public Governance Minister Lahcen Daoudi said in a video published on his party’s website, indicating it would be put in place between the end of February and middle of March.

The government announced a price-capping plan in 2018 after a surge in inflation to a five-year high fueled a consumer boycott of some of Morocco’s biggest firms. The protest hurt sales and caused layoffs at the country’s largest fuel distribution, dairy and mineral water companies.

The mechanism is expected to cover gasoline and the more commonly used diesel fuel, but exactly how it will operate hasn’t been detailed. Daoudi has in the past talked about setting a maximum margin for local distributors, as officials considered that an absolute cap on prices wouldn’t be sustainable against a sustained climb in global crude prices. The minister didn’t return calls seeking comment.

Morocco Sets Sights on Fuel Margins Instead of Price Caps

Morocco, the second-largest energy purchaser in Africa, has been relying exclusively on imports since its sole refinery halted production in 2015 after being placed into liquidation. It liberalized fuel prices the same year but the country’s competition laws allow for prices to be regulated for a period of six to 12 months under exceptional circumstances, as long as the antitrust authority approves. That authority, known as the Conseil de la Concurrence, will consider the government’s request on fuel prices on Feb. 14, according to the minister.

To contact the reporter on this story: Souhail Karam in Rabat at skaram10@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Mark Williams, Stuart Biggs

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