Implicit fuel subsidies cost 1.3 billion

Sonangol currently subsidizes about 60 percent of the cost of a liter of fuel, according to an administrator at the oil company, who estimated the value of the implicit subsidies at 1.39 billion dollars."We are supporting nearly 60 percent of the cost of the liter and in this context the value of the implicit subsidies is US $ 1.39 billion", said Baltazar Miguel, at a press conference in Luanda, to mark the 44th anniversary from the company. The oil company's manager added that the definition of fuel prices is not currently based on Sonangol's costs and margins, but on the basis of a benchmark for the region. “In view of the vicissitudes that the product itself has lived and lived from 2016 until now in the international market and that 80 percent of the fuels that are consumed in Angola are imported, it is easy to reach the conclusion that Sonangol is subsidizing fuels”, he noted, for Sonangol director Luís Maria, on the other hand. The same official guaranteed that the oil company and the Government are aligned in order to maintain justice and social peace and recalled that the last price change was made on January 1, 2016. “At that time the most important assumption for changing the price was the solution of the exchange rate from one dollar to 155 kwanzas. Today we have a parity of one dollar for approximately 500 kwanzas ”, he pointed out. Luís Maria stressed that the Government and Sonangol have been working closely since mid-2018 to ensure that the fuel supply is made in a sustainable way and to avoid additional difficulties for the most needy populations. "Sonangol is interested in developing activities in an environment of peace and social justice and this is the driving reason for the current negotiations in progress", stressed the administrator. The update of fuel prices due to the end of subsidies should happen later this year, but there is still no date to come into force. Last year, the Government and the International Monetary Fund (IMF) agreed on the end of fuel subsidies that should only be applied at the same time as a social transfer program for the most vulnerable families. The goal is to reach one million households by mid-2020, when the automatic fuel price adjustment mechanism is expected to come into force.

Lusa/VerAngola

27 of February, 2020

"We are supporting nearly 60 percent of the cost of the liter and in this context the value of the implicit subsidies is 1.39 billion dollars", said Baltazar Miguel, at a press conference in Luanda, to mark the 44th anniversary from the company.

The oil company's manager added that the definition of fuel prices is not currently based on Sonangol's costs and margins, but on the basis of a benchmark for the region.

“In view of the vicissitudes that the product itself has lived and lived from 2016 until now in the international market and that 80 percent of the fuels that are consumed in Angola are imported, it is easy to reach the conclusion that Sonangol is subsidizing fuels”, he noted, for Sonangol director Luís Maria, on the other hand.

The same official guaranteed that the oil company and the Government are aligned in order to maintain justice and social peace and recalled that the last price change was made on January 1, 2016.

“At that time the most important assumption for changing the price was the solution of the exchange rate from one dollar to 155 kwanzas. Today we have a parity of one dollar for approximately 500 kwanzas”, he pointed out.

Luís Maria stressed that the Government and Sonangol have been working closely since mid-2018 to ensure that the fuel supply is made in a sustainable way and to avoid additional difficulties for the most needy populations.

"Sonangol is interested in developing activities in an environment of peace and social justice and this is the driving reason for the current negotiations in progress", stressed the administrator.

The update of fuel prices due to the end of subsidies should happen later this year, but there is still no date to come into force.

Last year, the Government and the International Monetary Fund (IMF) agreed on the end of fuel subsidies that should only be applied at the same time as a social transfer program for the most vulnerable families.

The goal is to reach one million households by mid-2020, when the automatic fuel price adjustment mechanism is expected to come into force.