Energy Review - Petrol prices hike again |23 February 2017

The inevitable rise in domestic fuel prices is being exclusively attributed to fluctuations in global crude prices of late and currency volatility between rupee and dollar rates. There are also signals that non-OPEC members may voluntarily decrease production, which has the potential to further bolster international petroleum prices.

Analysts agree that prices are unlikely to come anywhere close to last year's low levels and on the contrary they state that for the current year, it is not a rosy picture at the pump.

For more than two years, a worldwide oil glut has depressed prices. On November 30, OPEC sought to stop this volatility by agreeing to trim output by a collective 1.2 million barrels a day for at least the first half of the year. Eleven non-OPEC nations led by Russia and Mexico pledged to cut production by an additional 558,000 barrels a day. In January, OPEC achieved a record compliance of at least 90 percent with its planned output cuts, estimates from the producer group and the Paris-based International Energy Agency show.

In neighbouring Mauritius, motorists were hit very hard one week ago by an important increase of all petroleum products. Mogas prices were made to jump nearly four Mauritian rupees, that is more than 10 percent increase. Authorities of the island justified this upward change of prices by the higher costs of the products on the world market and the depreciation of the local currency against the US dollar.

In South Africa, The Automobile Association (AA) warns that surging international petroleum prices are likely to hit South Africans hard at the pumps at the beginning of 2017. The AA further warned that the impact of production cuts of OPEC countries would adversely affect the prices at the pump in the country.

In India, petrol prices were up on three occasions in a month recently. According to a major petroleum company in India, the current level of international product prices of petrol and the Indian Rupee-US Dollar exchange rate warrant increase in the selling price of petrol.

As usual, this volatile situation is being closely monitored by the Seychelles Petroleum Company (Seypec) to minimise the imported hiking prices to its minimum. The local charges have been kept constant and the import management is under daily scanning at Seypec in order to pass on the least additional cost at the pump. Whereas the international components of the price structure of our petroleum imports are beyond its control, Seypec plays very tight on its supply chain, its local production costs as well as a strict respect of distribution efficiency.

The local petroleum policy to cushion the external increases is yielding tangible results in favour of consumers. Despite a 54% increase of crude oil for the past 12 months ending January 2017 and an appreciation of the US Dollar to the rupee for the same period, the price of Mogas at our local pumps in Seychelles has not been increased since the early days of January 2017 and is still at R17.51. It is the declared ready and forceful strategies that are guiding all decisions for determining the prices that motorist or industries pay in Seychelles. However the decisions and market developments worldwide still dictate the price-fixing factor in the country and are bound to remain as such. The IMF (International Monetary Fund) forecast is for the coming years showing a constant but actual rise in the price of oil.

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