Home | News | FUEL PRICES BRING COUNTRIES TO A STANDSTILL

FUEL PRICES BRING COUNTRIES TO A STANDSTILL

17/07/2022 14:03:00 Welcome Dlamini

Font size:

MBABANE – The current global price of fuel will probably go down in history as one of the worst and blame for this has been apportioned to the ongoing conflict between Russia and Ukraine.

This has seen some countries literally shutting down. From Africa to Europe and the Caribbean, governments have been grappling with protests from citizens who are aggrieved over the high fuel prices, which continue to rise alongside the cost of food, transport and other basic commodities. Some governments have been forced to reduce the fuel prices, while others have had to cushion or subsidise the costs. The Government of the Kingdom of Eswatini has over the years used the Strategic Oil Reserve Fund, to cushion the fuel price hike but, for the first time in almost 11 years, it can no longer afford to do so.“The government established the Strategic Oil Reserve Fund, which is a stabilisation/cushioning mechanism and it is financed by the fuel oil levy for cushioning of fuel prices against increases in prices. This current cushioning mechanism is an effective way of addressing the fuel price increase and to protect the consumer. However, presently the fund has been depleted, due to the prevailing situation experienced for the first time, thus causing the huge increases in the fuel prices,” explained Sikelela Khoza, the Communications Officer from the Ministry of Natural Resources and Energy.

Public transport operators have threatened to park their vehicles if government did not find alternative ways to bring down the cost of fuel. They even suggested that government should cut on the taxes on fuel by as much as 50 per cent. However, Minister of Finance Neal Rijkenberg said this would prove impossible because the money collected from the fuel levies went to paying salaries for civil servants. Khoza highlighted that it was unfortunate that government did not involve itself in fuel trading, which is sourcing and selling, so as to avoid competing with the private sector and the oil industry. “The oil companies source their own fuel from the international markets and the ministry regulates the fuel price and profit for the oil industry,” he said. He said, however, after the enactment of the Petroleum Act, 2020,the Eswatini National Oil Company (ENPC), as per Section 71 (a) and 24 (1)(a) of the Petroleum Act, will also play a role in procuring fuel once the Strategic Oil Reserve facility is in place. Khoza stated that even if Eswatini was to establish an oil refinery, this would not guarantee cheaper oil prices because crude oil prices and fuel products were internationally traded, and the appropriate reference price was determined by the global markets. “It is however in the ministry’s plans to establish a refinery in the long term. The priority for now is the establishment of the Strategic Oil Reserve Fund at Phuzumoya,” he said. He had been asked whether, considering that most South African refineries had been shutdown, Eswatini had any plans to establish a refinery to supply the region. Until all these plans come to fruition, Eswatini, just like nearly every country in the world, will continue to grapple with increasing fuel prices.The Times SUNDAY has taken a look at the countries that have been affected by the fuel price escalation:

Sri Lanka president forced out

Sri Lanka’s resigned President Gotabaya Rajapaksa is presently the biggest casualty of the fuel shortages after he was forced to flee his country by angry protesters, who stormed the Presidential Palace demanding that he should step down. The Sri Lanka economy hit rock bottom as it defaulted on international loans and soon faced rampant fuel and food shortages, and the government imposed a state of emergency. The government went into lockdown as employees were told to work from home until further notice, while schools were shut in the commercial capital of Colombo and surrounding areas. Fuel station queues grew rapidly as motorists grappled for what was left in the tanks in what was described as ‘a tragedy’ and the public said they ‘don’t know where this will end’. Public transport, power generation and medical services were given priority in fuel distribution, with some rationed to ports and airports.
The situation worsened and this led to thousands of protesters storming the president’s official residence demanding his resignation over mismanagement of the country’s economic crisis. The crowds also burned down the private residence of Prime Minister (PM) Ranil Wickremesinghe. Neither the president nor the PM were in the buildings when they were stormed.
The financial crisis has been described as the worst the country has seen since independence. Rampant inflation has been identified for having made prices soar and the country’s foreign currency reserves have all but run out, leaving it struggling to import food, fuel and medicine. Limited fuel and gas supplies have reportedly resumed in parts of Sri Lanka and long queues are said to have formed at filling stations and community centres thronged by thousands of weary residents.

PANAMA protests lead to action

Panama’s President Laurentino Cortizo had to announce a reduction in petrol prices after eight consecutive days of protests. Demonstrators had said they wanted the government to do more to curb inflation after the cost of food, medicine and electricity, as well as fuel, shot up. In a televised statement, President Cortizo said the price hikes were due to the ‘effects of the pandemic (COVID-19) and the consequences of the conflict in Ukraine’. Cortizo said he had been across the events in Panama and understood ‘the dissatisfaction of various sectors with the situation’. Teachers were the first to take to the streets at the start of July, but were then joined by construction workers, students, and members of indigenous groups. Some of the protest leaders met with government negotiators to try and reach consensus. The BBC reported that many protesters, however, said the petrol price freeze was not sufficient and that they would continue taking to the streets until broader action was taken.

HAITI informal fuel trade booms

Due to fuel shortages and rising fuel prices in the informal market, the country’s capital experienced tense moments with demonstrations by dozens of motorists. Haiti has reportedly been suffering from a recurring fuel crisis since the beginning of the year, which has worsened as a result of the conflict in Ukraine. The BBC reported that in avenues such as Delmas or Canapé Vert, demonstrators set fire to tyre barricades, threw stones on the road and interrupted traffic, while in areas such as Natcom or the Airport Crossing, shots were heard. According to Sputnik Agency, fuel increased fivefold in price and demonstrators urged the government to take action; while decrying the insecurity that impeded free movement and increased armed gangs. Sputnik reported that many service stations had remained closed in recent months or had opened occasionally.Meanwhile, informal fuel sales were reportedly growing along the highways, with trade unionists blaming government and the private sector. The situation was said to have been exacerbated by recent gang warfare in the north of the capital Port-au-Prince, very close to the site of the Varreux terminal, the country’s largest storage capacity. Since July 8, distribution trucks had reportedly been unable to access the facility and fuel shipments were blocked at the city’s port.

Antigua and Barbuda stop hikes

The government of the country announced a reduction in fuel prices as a means to provide relief to the general public. The reduction came about after protests against the sudden increase in fuel prices in the Caribbean country. The protests were carried out following the hike on March 14, 2022 and after the protests, the government promised that there would not be any more hikes. As reported by Reuters, the fuel prices witnessed a hike after the Russia and Ukraine war, and energy prices had been marked by volatility in the wake of Russia’s invasion of Ukraine.This increase in fuel is said to have created shockwaves in the global energy markets and resulted in an increase in prices of food as well, across the globe. The news agency said the Russia and Ukraine war had caused an increase in the global prices of petrol and diesel, starting an outcry against inflation.It reported that the Caribbean countries faced the same, and sudden increases in prices of fuel, food products and other daily use items were witnessed.

South African’s struggle

Closer to home, some towns in neighbouring South Africa, such as Mbombela and Gqeberha, have been severely disrupted by protests by taxi operators over the high fuel prices. In Gqeberha, the taxi operators, according to the SABC, used their vehicles to block off the Stanford road intersection on the N2 and sections of Stanford road. The protest was later dispersed by police and mini-bus taxis were impounded. The protesting taxi operators were quoted saying; making ends meet was a daily struggle amid the soaring fuel prices. Some of the drivers called on government to urgently intervene. One driver was quoted saying: “We need to stand up for this because it is not fair for us at all, we started this here, because in the taxi industry we are struggling, we can’t feed our families the government needs to act urgently.” Another said: “We want our government to come up with a plan, even to subsidise our petrol because we are suffering or something must be done, please.” The strike reportedly affected motorists and commuters all across the city and the roads were said to have been congested as motorists used alternative routes and many commuters had to walk to work. Police spokesperson Colonel Priscilla Naidu said law enforcement authorities acted quickly and the roads were cleared.

In Mbombela meanwhile, protests denouncing increased fuel prices also got underway on July 6 and media reports indicated that many of the protests, which had mostly taken the form of roadblocks, were led by taxi drivers. Some local community members reportedly also joined the protests. Officials were deployed to the protest-affected locations and the public was warned that further road travel delays were likely. Clashes between protesters and the police were said to have occurred as demonstrators ignored police orders to disperse.
There was anticipation that demonstrations could persist and spread to additional locations in Mpumalanga, but this did not materialise.
Citizens were advised to avoid all the protests, and to not travel through protester roadblocks until police cleared them. They were also advised to heed the instructions of local officials and to reconfirm the status of routes before departure.

Cameroon hit in the pocket

Further up north, authorities in Cameroon said thousands of vehicles had been halted by a fresh scarcity of fuel caused, in part, by Russia’s invasion of Ukraine. The Cameroon government was reported saying it had been forced to spend nearly half-a-billion dollars in fuel subsidies since Russia’s February invasion, as western sanctions had hindered trade with Moscow. More than 100 drivers reportedly packed a filling station in the Etoudi neighborhood of Cameroon’s capital, Yaoundé, honking their horns to protest a fresh fuel shortage.
The drivers said their incomes had nosedived since Yaoundé ran short on fuel and the scarcity spread to other towns. The town of Ebolowa and its surroundings reportedly turned into a mess because waste and refuse collection vehicles were halted by a lack of fuel.

Cameroon’s government said several thousand public buses, taxis, and trucks were not in use because of the fuel shortage, the second one to hit the country since April. Some of the vehicles were reportedly destined for the neighboring Central African Republic, Chad, and Gabon, slowing regional trade and transport. Cameroon’s energy minister, in a press release, again blamed Russia and its invasion of Ukraine. Western sanctions for Russia’s assault have hampered its trade and led to volatile, higher prices for oil and gas.Cameroon buys more than half its gasoline from Russia, one of the world’s top suppliers of petroleum products, wheat, and fertiliser.

Veronique Moampea Mbio, the Director General of Cameroon’s Petroleum Distribution Company (SCDP), speaking on Cameroon’s state broadcaster, CRTV, said Cameroonians should be patient. Mbio said the shortage of petroleum products was provoked by the inability of marketers to pay the surplus sums of money requested before the delivery of fuel. She said banks were reluctant to exceed credit limits to marketers of petroleum products because regular loan repayments may be hindered by unpredictable market prices. Cameroon’s government said it had already spent US$485 million on fuel subsidies since Russia’s invasion in February and may need to spend more than US$1 billion this year. Mbio said Cameroon’s president, Paul Biya, had ordered the government to immediately pay needed subsidies for petroleum products to be imported in coming weeks.