Morocco ponders pegging domestic oil prices to international market
Moroccan minister of Finance and Privatization, Fathallah Oualalou highlighted, here Wednesday, the need to re-implement the system that pegs domestic oil prices to international market.
Speaking at the House of Representatives' question time, he noted that the latest increase of combustible prices has relatively alleviated the burden of the State budget.
The minister called for resuming efforts to save on energy and develop oil exploration operations to mitigate the negative impact of oil prices increase on the State budget.
Out of the MAD 4.2 billion (1 USD = 8.9 MAD) that the government allocated from the current finance bill to cover the subsidy expenditures, MAD 2.2 billion are allocated to compensate the 2004 oil products payment arrears, MAD 500 million to settle the payment arrears of sugar and flour and MAD 1.5 billion to subsidy basic products in the current year.
As of the first four months of the fiscal year, the arrears related to subsidy oil products stood at MAD 1.8 billion and they are to resume their continuing tendency.
Due to the rise of international oil prices, the Moroccan government resorted, on May 16, 2005, to the increase of combustible prices. This increase attained MAD 9.85/litre for gas, and MAD 6.46/litre for diesel. The increase varied between 5.3% for gas and 24% for industrial fuel.
Morocco's oil imports and supply of oil stood at MAD 4 billion in Q1 2005 and at MAD 22 billion in 2004.
In order to stave off the undesirable impact of the oil price fluctuations on the local market, Morocco has adopted a policy consisting in the diversification of the supply sources.
The Moroccan government has earmarked about MAD 3.5 billion for investments in the field of combustibles and butane gas, in the coming three years.
It has concluded, on December 20, 2004, a MAD 6 billion investment agreement with the state-owned oil company SAMIR. The agreement is meant to modernize the Mohammedia-based refinery (70 km south of Rabat) in addition to other future refinery projects in Jorf Lasfar (south of Rabat).
