Rise in price of jet fuel may push up air fares – aimnews.org

Maputo, 10 Apr (AIM) – Felisbela Nhate, National Director of Hydrocarbons and Fuels of Mozambique, warned that the cost of air transport could increase in the near future, following the sharp rise in the price of jet fuel on the international market.

According to Nhate, speaking to journalists on Thursday in Maputo, in the presence of fuel importers and distributors, jet fuel registered one of the biggest recent variations, rising from around 769 to 1,595 dollars per ton.

She explained that the worsening of prices is largely associated with geopolitical instability in the Middle East, one of the main fuel supplying regions.

The United Nations Conference on Trade and Development (UNCTAD) also warned that Mozambique is among the countries likely to be hit by rising costs due to the US-Israeli war of aggression against Iran.

The Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman, is the transport route for around 20% of the oil traded worldwide and a significant part of the liquefied natural gas transported by sea. It had been terminated by Iran, ahead of an unstable ceasefire that was supposed to cover a two-week period while negotiations were ongoing.

This scenario, she said, could directly impact the operating costs of airlines and, consequently, the fares charged to passengers.

“The worsening political context in the Middle East had a direct impact not only on the price of the product itself, but also on shipping costs,” said Nhate.

According to Nhate, the cost of transporting a barrel of oil went from around five dollars in January to around 13.7 dollars, which directly influences the CIF Maputo price, which is the basis of the fuel import bill.

“The shipping cost is included in the CIF calculation equation, which is the price reflected in our import invoice”, he explains.

Jet fuel plays an essential role in the aviation sector, being used in commercial and cargo aircraft, and its pricing structure depends on several factors, including the international cost of refined petroleum products, transport and logistics expenses, exchange rates, storage costs, operator margins and tax burdens.

In Mozambique, the fuel pricing mechanism is regulated by a specific legal framework, aiming to guarantee transparency and market balance, with the Energy Regulatory Authority (ARENE) being the body responsible for defining and updating prices.

Given the current context, Nhate admitted the possibility of regulatory intervention. “We have pressure on our pricing mechanism and some need for government intervention to mitigate impacts,” she said.

The director also warned of the risks associated with the increase in import bills, including reduced distributor liquidity, restrictions on access to bank financing and potential challenges in the regular supply of fuel to the country.

At a regional level, several Southern African countries have already adjusted fuel prices, reflecting the widespread impact of the international crisis.

Faced with this scenario, the Mozambican authorities guarantee that they are evaluating measures to mitigate the economic effects without compromising the stability of the sector.
(AIM)
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