Threat to supply chains from Mozambique fuel price rise

10 May 2010

10 May 2010 | Neil Oelofse

African procurement specialists have said the fuel price increase implemented in Mozambique at the end of April could have a significant impact on prices through the supply chain.

Mozambican deputy energy minister Jaime Himede announced a petrol price rise of 17 per cent to 31.09 meticais (US$0.92), while diesel would increase by 14 per cent to 34.1 meticais (US$1).

Mozambican fuel prices were frozen between March 2009 and March 2010, but further hikes are likely now that the government is systematically withdrawing  its subsidy.

International procurement consultant Biryahwaho Ellis told SM: “Industries are significantly affected by domestic petroleum price increases because they consume large amounts of petroleum products as intermediate inputs in their production process.”

Indirectly, the fuel increase would lead to an increase in the price of other products and services, which would be passed along the supply chain, Ellis said.

East African procurement consultant Muhimbise Andrew advised purchasers to reduce unnecessary fuel consumption.

“Use one company car to transport managers instead of many; buy in bulk by entering long-term contracts that tie in the price, and seek out cheaper alternatives to fuel like electricity, gas and green energy.”

Andrew said transportation and logistics companies should make better use of their “fuel-guzzling trucks” by scheduling economically viable return trips.

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