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Higher hydrocarbon prices in Burkina Faso – VivAfrik

Friday, November 9, 2018, pump prices for super and diesel increased by 75 Fcfa, while the price of gas remained unchanged. The Burkinabé government is concerned with passing on the rise in prices in international markets, especially to counter the high bill of public subsidies. However, the measure should lead to higher transport and food prices.

Back to reality for Burkinabe consumers, who woke up on Friday, November 9, with an increase of 75 Fcfa prices on the pump of super and gas oil. The measure was adopted the day before by the Council of Ministers, chaired by Prime Minister Paul Kaba Tchieba, who kept the price of gas unchanged.

But the coalition against the good life, corruption, impunity and freedom that brought together several civil society organizations called on the population to say "no" to look up liters of hydrocarbons, valid from Friday.

"With astonishment, coupled with a sense of indignation, the CCVC has learned the government's decision to increase the price by CFA francs 75. Search for liter" Super "and" Diesel "from Friday, November 9, 2018", writes the coalition in a statement signed by first president, Chrysogone Zougmore.

"While our people are already bowing under the weight of dear life and misery, in a complete indifference of the ruling power such an attitude, cynical and contemptuous, appears as a gross provocation to the CCVC and to all social forces concerned with wellbeing caring for our people, can not remain indifferent, "she continues.

According to the Government's observations, this increase follows the observation that maintaining prices at the pump includes a subsidy of about 58 CFA per liter Super 91 and up to 64 CFA francs for diesel. In Burkina, prices for petroleum products are actually adjusted according to the price of the Brent barrel and the US dollar.

With the rising prices on the markets in recent months, the state subsidy bill has also risen. It's nearly 14 billion CFA francs that the state pays every month, including 8 billion for pump subsidies, which not only burdens the budget, but also causes huge backlogs that cause their cash flow to trouble the National Society. Electricity (Sonabel) and Hydrocarbons (Sonabhy).

For this reason, based on a report on ensuring supply of hydrocarbons to Burkina Faso, the government has adopted a regulation to eliminate the government's debt to the country. Sonabel, the introduction of a mechanism for adjusting the hydrocarbon prices at the pump and the decision to increase the prices at the pump. Minister of Communications and Government Spokesman Remis Fulgence Dandjinou recalled that the government lowered prices by 50 Fcfa per liter in 2016, a decline that has increased since 2015 when prices have already risen slightly at the international level. "The government hoped that this increase would slow down, so we do not have to make that adjustment," said Remis Dandjinou after the Cabinet meeting.

Salted bill

According to the government spokesman, the state subsidy amounts to around CFA14 billion a month for pump prices, domestic gas and Sonabel generating electricity from power sources. Hydrocarbons. "In order to prevent international fluctuations from affecting the KWH price, the government has decided to maintain the gas subsidy, the subsidy for Sonabel, but the subsidy we are providing for the pump will be reduced," said Rémis Dandjinou, speaking for himself the enormous weight of these subsidies. "Today we owe Sonabhy about 240 billion CFA francs, and the banks are no longer willing to lend money to Sonabhy to buy the fuel we will consume," said the minister, who blamed this situation for rising Prices in the international markets.

"There is an international situation that we do not control, all of which cause a price increase that can no longer be sustained, but the government has decided not to talk about gas and subsidies on Sonabel," said Remis Fulgence Dandjinou, who Minister of Communications and Speaker of the Burkinabe Government.

If the government of President Roch Marc Christiant Kaboré does not lack arguments to justify its decision, this measure can lead to an increase in transport prices and also of raw materials. In May 2016, as a result of the price reduction on the pump, the price of tickets has also dropped. With this increase, there is no doubt that airlines will also pass on the increase in tickets, an inflation that will also affect other key products that some consumer associations consider "excessive increase".

A great effort by the government, which took over the counterpart through the subsidy

The issue of petroleum products is becoming more and more important given its weight in the structure of production costs and its significant impact on the behavior of macroeconomic aggregates. If prices at the pump have been stuck in Burkina Faso for just over two years since May 2016, this is due to a considerable effort on the part of the government, which has taken over the counterparty through the grant.

While these prices on the pump remained static, the cost of oil has steadily increased on the international market. For comparison, the monthly average value per barrel of Brent rose from 46.45% US $ to US $ 77.13 per barrel between May 2016 and May 2018, an increase of 66.04%. %. In October 2018 Brent is at $ 82.09, up 76.77% from May 2016.

In the meantime, the US dollar has developed irregularly between May 2016 and May 2018, resulting in a modest loss of CFA 4.78 on average, resulting in defaults on product sales. The oil companies amounted to CFA 73.320 billion on 30 June 2018.

As in other sub-region countries, Burkina Faso's hydrocarbon prices are therefore based on the average of two main variables, the Baril de Brent price and the US dollar exchange rate.

Moctar FICOU / VivAfrik

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