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|**Country E R**|**Pricing policy and strategy**|**Fuel supply conditions**|
|---|---|---|
|Morocco<br>√|<br>**Pricing policy**: Government controls and subsidizes fuel prices and<br>adjusts them infrequently. The price of LPG has been frozen since<br>1995, and other fuel prices were not adjusted between 2008 and Jun<br>2012, when the sharpest price increases in years were implemented<br>for gasoline, diesel, and industrial fuel. The Compensation Fund<br>(Caisse de Compensation) pays for subsidies for certain<br>commodities, including petroleum products, sugar, and wheat.<br>**Social protection**: Under draft plans released in Jan 2013, the<br>subsidy system would be fully or partially replaced with monthly<br>cash payments of DH 1,000 (US$116), with the new program<br>potentially taking effect as early as June but taking about four years<br>to implement rather than a sudden one-off hike in prices.<br>**Consequences of subsidies**: Subsidies for petroleum products<br>including LPG increased to US$5.4 billion by 2011, of which diesel<br>had the largest share at 47%,followed bybutane at 30%.|**Supply**: Domestic refining meets about<br>three quarters of demand and the rest is<br>imported.<br>**In-smuggling**: Fuels are smuggled from<br>Algeria into Morocco.|
||Year<br>2007<br>2008<br>2009<br>2010<br>2011<br>US$billion<br>1.3<br>3.2<br>0.9<br>2.9<br>5.4<br>% of GDP<br>1.7<br>3.6<br>1.0<br>3.2<br>5.3<br>_Source_: Caisse de Compensation||
||.<br>Because of the magnitude of the subsidy and the pricing policy that<br>sets the same unit price independently of cylinder size (3, 6, or 12<br>kg), household use of LPG is virtually universal and there are many<br>3-kg cylinders in circulation, against the backdrop of most other<br>LPG markets elsewhere having opted for 10–15-kg cylinders<br>because of large economics of scale associated with cylinder size.||
|Mozam-<br>bique|<br>**Pricing policy**: A 2006 decree provides for government control of<br>prices of gasoline, diesel, kerosene, and LPG. Petroleum product<br>prices are reviewed every month and maximum retail prices in cities<br>with terminals are published. For other areas, transport costs are<br>added. Energy and finance ministers handle fuel prices as long as<br>price changes are smaller than 20%; if changes are larger, Council<br>of Ministers is responsible for determining prices. Government used<br>to adjust fuel prices every month according to a market-based<br>formula. VAT and fuel tax are not levied on kerosene. The diesel<br>fuel tax is halved for agriculture, fisheries, and power generation. In<br>response to the food and fuel price shock of 2008, government<br>introduced an urban transportation subsidy in Feb and suspended<br>fuel-related taxes until Jul 2009. Government froze fuel prices in<br>Apr 2009 and asked fuel importers to sell below market prices. In<br>Mar 2010, government began raising fuel prices gradually. The<br>prices of petroleum products other than diesel were increased by<br>more than 70% and reached market levels by Aug 2010; diesel<br>prices were raised by 38% to May 2010 but not raised further,<br>incurring losses. In Feb 2010, an agreement between government<br>and fuel importers to settle outstanding claims for 2008–09 came<br>into effect. Government also paid compensation for below-market<br>fuel prices in 2010 until end-May. Government in Dec 2010 paid<br>importers fully for the losses incurred in that year by charging other<br>petroleum products more to cross-subsidize diesel. Government<br>increased gasoline and diesel prices by 10% in Apr 2011 and 8% in<br>Jul 2011, but has not adjusted fuel prices since. Government had<br>hoped to phase out fuel subsidies by the end of 2010, but the events<br>in the Middle East and North Africa were considered extraordinary<br>and government extended the phase-out date. In Feb–Apr and Aug–<br>Sep 2012, world fuel prices rose above the Jul 2011 levels, again<br>leading to losses. In Oct 2012, government completed payments to<br>importers for fuel subsidies incurred in 2011.|<br>**Supply**: Petromoc was the sole importer<br>until 1998, but had run up sizable losses. Its<br>monopoly position was abolished and<br>replaced by Imopetro, owned jointly by<br>main fuel distributors. A 2006 decree<br>specified that Imopetro be the sole importer<br>of petroleum products, but the decree was<br>amended in Mar 2009, giving government<br>the authority to designate an alternative<br>importer. Until May 2012, government had<br>a public tender system for LPG, but the<br>system was abandoned in favor of<br>appointing Petromoc as the sole supplier.<br>**Shortages**: In Jul 2009, fuel distributors<br>stopped selling because they were not being<br>reimbursed for price subsidies, creating<br>severe fuel shortages. In 2011, serious LPG<br>shortages were experienced when South<br>Africa, from which Mozambique imports<br>LPG, ran out of LPG.<br>**Maritime security**: To fight piracy, which<br>resulted in increased transport costs, fuel<br>prices, and insurance bills, Mozambique,<br>South Africa, and Tanzania in early 2012<br>signed a tripartite pact to strengthen<br>maritime security in the Indian Ocean.|

**Supply** : Petromoc was the sole importer until 1998, but had run up sizable losses. Its monopoly position was abolished and replaced by Imopetro, owned jointly by main fuel distributors. A 2006 decree specified that Imopetro be the sole importer of petroleum products, but the decree was amended in Mar 2009, giving government the authority to designate an alternative importer. Until May 2012, government had a public tender system for LPG, but the system was abandoned in favor of appointing Petromoc as the sole supplier. **Shortages** : In Jul 2009, fuel distributors stopped selling because they were not being reimbursed for price subsidies, creating severe fuel shortages. In 2011, serious LPG shortages were experienced when South Africa, from which Mozambique imports LPG, ran out of LPG.