Morocco’s Government ‘Promises’ to Combat Rising Fuel Prices

Rabat – Two days after Morocco’s market watchdog issued a disturbing report on the country’s fuel market, the government issued a statement yesterday, saying that they are working on the “majority of the recommendations.”

On the list of over 20 detailed recommendations, the government commented on only three, relating to imposing a tax on excess profits from fuel companies and providing direct aid to transportation professionals.

Regarding the new proposed tax on excess profits, the government says that it is edging towards implementing a tax targeting fuel companies seeking to take advantage of the energy crisis to boost their profit margins.

Setting aside the proposal to slap a higher tax on fuel companies, the government’s response to the Council’s report leaves much to be desired for Moroccans trying to make ends meet.

The government did not acknowledge a key finding within the report, which argued that predatory market practices and monopoly power are a likely cause of the relentless rise in fuel prices.

The omission is likely to create further suspicion of the current cabinet, given the head of government’s position at the helm of one of the companies suspected of abusing its monopoly power.

Much like reports issued by the Accountability Council on the irregularities in managing public funds, the Competition Council’s report looks to be on track to being brushed aside after becoming national headlines for a few days following its publication.

On the question of distributing targeted subsidies to transportation professionals, the government’s response seems to take little direction from the council’s recommendations. The government argues that the method it has adopted to distribute fuel subsidies is the only viable option given that there is no comprehensive public record to rely on when distributing aid. The council meanwhile has actually called to halt this form of aid, as they are detrimental to the state budget and do little to solve the underlying issue.

According to the competition council, the strategy of subsidizing energy products has proved its limitations in the past. The last time Morocco attempted to subsidize fuel in 2012, the state budget spent MAD 50 billion ($4.5 billion) on fuel subsidies, the equivalent of the budget of the ministry of education then, and five times the budget of the health ministry.

Instead, the council proposes a list of reforms that would enhance the market’s openness and encourage competition to drive prices down.