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Abu Dhabi, UAEWednesday 17 October 2018

Morocco close to implementing fuel prices cap

Increases in the prices of dairy products, mineral water and fuel have angered consumers

Chefchaouen, in the Moroccan Rif region. Moroccans have been complaining about rising prices. AFP
Chefchaouen, in the Moroccan Rif region. Moroccans have been complaining about rising prices. AFP

Morocco’s government has finalised a plan to cap fuel prices as it seeks to defuse anger over the cost of living that has already sparked street protests and a consumer boycott.

The plan, which must still be approved by Prime Minister Saad-Eddine El Othmani, allows the government to adjust fuel prices every 15 days. It would run for six to 12 months, said General Affairs Minister Lahcen Daoudi, adding that Mr El Othmani was expected to “sign it any time. All I can say now is that it will be enacted this year.”

While Morocco’s inflation rate is one of the lowest in the region, and the country has been spared much of the post-Arab Spring violence that gripped other nations, price increases are grazing a five-year high, unleashing social unrest that has worried the government. Consumer inflation was an annual 2.6 per cent in May, and the central bank expects it to stay around that level this year, before falling to 1.4 per cent in 2019.

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Increases in the prices of dairy products, mineral water and fuel triggered a social-media-driven boycott campaign that has hit the balance sheets of companies such as French food giant Danone.

Fuel subsidies were lifted in 2015 as part of an austerity programme. Following the move, criticism has been directed at fuel distributors, whose profits have soared. Under the new plan, the government can impose temporary measures to counter excessive fluctuations in prices brought about by extraordinary measures, Mr Daoudi said.

While the proposal would impact the margins of distributors such as Total Maroc and Vivo Energy, “constant dialogue will be maintained” with the Moroccan Petroleum Group, the industry operators' organisation known by its French acronym GPM, according to Mr Daoudi.

Shares in Total Maroc, the North African country’s second-largest fuel distributor, have fallen by almost 50 per cent on the Casablanca stock exchange since May 9, when Mr Daoudi announced that the government intended to cap fuel prices.