Politics

Hike in fuel price looms as gov’t hints on cutting subsidy by 50%.

by Mua Patrick
19 Jan 2023 21:26
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The prices of petroleum products will likely witness an increase in the course of the year, government authorities have hinted. The issue of fuel price subsidies has for weeks been in the news as an International Monetary Fund, IMF, mission visited the country.

The looming hike in fuel prices was recently brought to the fore by the Director General of the Budget at the Ministry of Finance, Cyrille Edou Alo'o.

The senior official has announced that government intends scaling down by 50% its budget on fuel subsidy.

"The subsidies will continue. With smaller envelopes…, the future will tell us," said Edou Alo'o.

For him, the state plans to spend 350 billion FCFA in 2023 to subsidize pump prices.

But in an international context tinged with uncertainty, experts are already arguing such an amount would not be enough to maintain current fuel prices.

For the 2022 fiscal year, the public treasury had to spend 700 billion FCFA on subsidy against 150 billion FCFA a year earlier.

"When you buy a gas cylinder at 6,500 FCFA, it really costs 13,500 FCFA. The state budget bears the rest. This means that if the budget was not drawn up in this way, you would normally have to pay 13,500 FCFA. The same goes for a litre of petrol sold at 639 FCFA, which costs 1,350 FCFA," explained the MINFI official.

It has been gathered that by reducing fuel subsidy by half, the state wants to limit cash flow tensions and direct its resources towards development as prescribed by the IMF.

This will not be without impact on households who will see the difference reflected in prices at the pump.

When quizzed on the issue by a sister publication, Cyril Alo'o Edou was equivocal.

He said:"…these are decisions that belong to the highest authorities. It is impossible for me to talk about it because I know nothing about it”.

“If prices are readjusted, Cameroon would become the third country in CEMAC after the Central African Republic, CAR, and Congo to take such a step, a pill that will definitely be difficult to swallow for households already caught in the grip of living conditions made harsh by a generalised increase in market prices,” he added.

Recall that the last increase in fuel prices in Cameroon, which was 81 FCFA on gasoline and 80 FCFA on diesel, dates back to 2014.