Gov’t justifies hike in fuel prices.

The fresh increase in the prices of fuel, which will further have a strong bearing on the living conditions of Cameroonians already battling biting inflation, was made official Friday February 2. 

The announcement, which comes barely a year after another fuel price increase, was made public through a communique issued by the Secretary General at the Prime Minister’s Office, Prof Fouda Seraphin Magloire. 

The new prices, as per the communique from the clerk at the PM’s Office, went into effect Saturday February 3. 

According to the release, the new prices were reached after consultations between the government and social partners.

The new measures, the release detailed, aims at addressing increasing budgetary constraints on the State and to avoid tensions faced in the supply chain of petroleum products to the national market. 

The release, issued on the instructions of the Head of State, indicates that the subsidy removal will enable the government to carry out earmarked development projects for the benefit of all citizens. 

Understanding the new fuel prices 

According to the release, the pump price of premium fuel, popularly called Super, now sells at 840 FCFA per litre, up from 730 FCFA. The new price shows an increase of 110 FCFA, representing a 15% increase.

The new pump price of gas oil, as per the release, has been fixed at 828 FCFA per litre, up from 720 FCFA per litre. This makes a spike of 108 FCFA per litre in the price of gas oil, representing 15% increase. 

The release specified that the prices of kerosene and cooking gas remain unchanged at 350 FCFA per litre and 6,500 FCFA per 12.5 kilogramme bottle, respectively. 

Gov’t justifies price hike 

The government, through the release, appealed for calm and support of all citizens in the implementation of the new measures.

“…the government is counting on the public's support and civic-mindedness in the implementation of these measures,” stated the release.

The release from the scribe at the Prime Minister’s Office clarified that the subsidy cut will help government in realising development projects envisaged by the Head of State, in a bid to achieve the 2035 emergence vision. 

Gov’t resists IMF pressure to make 40% increase 

It should be recalled that the International Monetary Fund, IMF, had, in the last few years, been on government’s throat, demanding that subsidy on fuel be reduced. 

As per details that filtered to our newsroom, the IMF, had recently been pressuring the government to make a 40% increase on the prices of fuel. 

Such demands, we gathered from dependable inside sources, were resisted by the government, advancing the dire economic situation of citizens. 

Going by the 40% demand of the IMF, prices of premium fuel commonly called Super, would have been increased from 730 to 1,022 FCFA, representing an increase of 292 FCFA.

In the same vein, the price of gas oil would have moved from 720 FCFA as per IMF demand to 1,008 FCFA, representing 288 FCFA increase. 

The IMF Head of Mission to Cameroon, Cemile Sancak, it should be recalled, had in early 2023, led a delegation to Cameroon during which discussions centered on the issue of reducing subsidy on fuel prices. 

The Bretton Woods Institution, had, at the end of the meeting, issued a release detailing that it had agreed with different State authorities on the need to “…reduce the costly fuel subsidies, which are unsustainable under the current international oil price projections and are poorly targeted to those in need and crowd out priority spending”. 

The IMF had, in the release, expressed worries that “the fuel subsidies represent six times the budget allocated to agriculture, four times that to health, and over three times that to energy and water”.

It noted that reforms in fuel subsidy, “would need to be accompanied by measures to mitigate the impact on the most vulnerable, including cash transfers”.

Gov’t rolls out measures to accompany citizens  

In a bid to reduce the burden of the fuel price increase on citizens, government, through the release, has announced a series of measures aimed at reducing the impact on compatriots. 

As mitigating measure, the government has announced the increase of the basic salaries of civil servants by 5%. 

The release from Prof Fouda Magloire also announced the opening of dialogue by the State with private sector on minimum guaranteed wage. It should be noted that during the last fuel increase in 2023, the minimum wage was risen from 36,250 FCFA to 41,875 FCFA.

Also, as a palliative measure, government also announced the reduction of certain tax and customs duties in the road transport sector.

Such soothing measures, government has maintained, are aimed at ensuring the purchasing power of citizens are not reduced. 

“In general, government is committed to pursuing negotiations with all stakeholders, in order to mitigate the impact of the above-mentioned readjustment of fuel prices on the purchasing power of households and business activity,” the release stated. 

Revisiting Biya’s earlier hint of fuel price increase 

The Head of State had, in his traditional end-of-year address to the nation on December 31, 2023, hinted on reducing State subsidy on fuel prices. This gave to the understanding that the State was already finetuning moves to announce another fuel price increase. 

Biya gave the hints while commenting on the situation of fuel shortage, which major towns of the country faced at the end of 2023. 

To address the situation, Biya said he had “instructed the Government to take urgent measures to ensure constant supply of fuel”. 

The Head of State was clear that challenges in the sector are broader and more complex.

Biya told compatriots that maintaining pump prices of fuel at their current levels back then, “which are far below those in neighbouring countries, the State has to make huge financial sacrifices to subsidise petroleum product imports”.

“The burden of these subsidies weighs heavily on our budget and significantly reduces the much-needed resources to address other problems facing our people. Last year, the Government slightly increased the pump prices of fuel. As a result, the subsidy on petroleum products decreased from over 1,000 billion CFA francs in 2022 to around 640 billion CFA francs in 2023. However, this subsidy continues to weigh heavily on public coffers,” Biya detailed.  

Biya was categorical that: “Though we will most certainly have no choice but to reduce it further, we will ensure that the requisite adjustments do not significantly impact the purchasing power of households”. 

He said the rehabilitation of the National Refining Company Ltd, SONARA, which must be expedited, should help to improve the situation in this sector.

However, regime critics say the reduction in subsidy, without a proportionate increase in the purchasing power of consumers to measure with the over 1,000 billion FCFA spent in 2022 to around 640 billion FCFA used in 2023, is simply outmaneuvering the already vulnerable citizens. 

Many have also expressed fears that the situation of the thousands of Cameroonians in the private sector might get worst as such slight adjustments from the State might not be reflected in the paltry sums they earn.