21/1/2019
Is IMF's West African Fuel Subsidy Still in Place?
In July last year we carried a story about West African fuel prices and the longstanding claim by the IMF and some West African governments that pump prices are subsidized. In the wake of a precipitous drop in world crude oil prices over the last six months we decided to go back and check pump prices in the different countries. This is what we found:

(all prices courtesy of www.globalpetrolprices.com/gasoline_prices/ )



 $/litre
16/7/2018
 $/litre
21/1/2019
 Absolute change ($)
 % change from original
Nigeria
 0.42
 0.41
 -0.01
 -2.4
Liberia
0.84
 0.90
 +0.06
 +7.1
USA 
0.84
 0.68
 -0.16
 -19.1
Togo   0.89
 0.94
 +0.05
 +5.6
Benin 
0.94
 0.81
 -0.13
 -13.8
Sierra Leone
1.04
 0.96
 -0.08
 -7.7
Ghana
1.04
 1.00
 -0.04
 -3.8
Ivory Coast
1.09
 1.04
 -0.05
 -4.6
Guinea 
1.11
 1.04
 -0.07
 -6.3
Senegal
1.24
 1.19
 -0.05
 -4.0
Mali
1.28
 1.22
 -0.06
 -4.7
Cape Verde
1.39
 1.11
 -0.28
 -20.1
UK
1.68
 1.52
 -0.16
 -9.5
Germany 
1.69
 1.51
 -0.18
 -10.7
France
1.81
 1.62
 -0.19
 -10.5

The picture we found is as we described it in July last year. Crude oil prices  dropped from around $75/barrel to around $60/barrel (see chart below), approximately 20%. In response most West African countries decreased their pump price only marginally by well under 10%. By contrast, US prices, already low and presumably guided by the invisible hand of the free market (last time we checked, Exxon USA, Mobil USA and all the others there were doing just fine), decreased almost 20%. At $0.68/ litre they are considerably lower than the lowest West African price, Benin's $0.81/litre (this excludes Nigeria, an  oil producer and quite evidently a special case).

World crude oil prices

Excluding Nigeria, the West African average of 21/1/2019 is $1.02/litre, 50% higher than the US price. The high-tax European countries shown, whilst still high-priced reduced their pump price by generally higher percentages than their West African counterparts.

Clearly, when one considers the huge volumes involved, there are enormous windfall profits for West African countries when the world market crude oil price drops. The question is, between the oil marketing companies, the individual governments and the IMF (which after all as a large creditor to West African countries is not exactly a disinterested party), where do these windfall profits go?






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