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By Ayoub Derraza
Rabat – In response to the Competition Council’s statement that capping fuel prices would hurt Moroccan oil market, the minister of public affairs and governance, Lahcen Daoudi, tweeted today that his ministry will proceed with its decision to cap fuel prices.
The move will be made in coordination with various industry stakeholders, according to Daoudi.
Unnecessary and harmful
Competition Council President Driss Guerraoui said earlier today that the government’s decision to cap fuel prices was unnecessary and would harm industry stakeholders.
Guerraoui told a press conference that the decision to cap up prices was “a real danger that could harm the small and medium-size stakeholders, making them more vulnerable.”
Not only will the government’s choice to cap prices not be sufficient from an economic and competitive point of view, Guerraoui argued, but it would also be harmful from a social justice perspective.
The measure can be applied to all stakeholders, regardless of their size and capacity, the council said in its opinion, which was approved on Thursday at its plenary session.
We’ve been here before
Guerraoui noted that this measure was already tested between December 2014 and December 2015 without achieving the expected results.
He attributed the first failed attempt to the fact that stakeholders “generally adopt the fixed maximum prices without any effort to reduce them.”
Guerraoui noted that the government’s request “did not meet the legal requirements of the Law on Freedom of Prices and Competition, which requires provisional measures aimed at temporarily excluding a product or service from free prices.”
According to Article 4 of the Law on Freedom of Prices and Competition, the administration may “take temporary measures against excessive price increases or decreases caused by exceptional, catastrophic or manifestly unusual market conditions in a sector,” after consulting the Competition Council.
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The article allows the government to cap fuel prices within six months, subject to a one-time extension.
In a press release issued earlier this month, Daoudi said that the opinion of the competition council was “not binding,” adding that the government will “cap prices regardless of the council’s position.”
Daoudi is seeking to conclude a permanent agreement with companies as part of the negotiations conducted by the Moroccan Petroleum Group (GPM). The aim is to set a maximum profit that different companies can make, regardless of whether global market prices rise or fall.
