The hidden side of gasoline pump prices in Togo

22May2015
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By Carpophore Ntagungira

Despite the 11% fall in the price of gasoline at the pump between June 2014 and March 2015, Togolese consumers unions continue to lament that the decline in the barrel price is not adequately reflected in the pump price.[1] Meanwhile, Togolese Government subsidies to support oil products policy have already cost the government US $28 million in 2014, or 3% of revenues.[2]

What does all this mean? Breaking down the price of gasoline can begin to provide some insight.

In March 2015, the price of gasoline was fixed at 580 CFA francs ($ 0.96) per litre – a lower rate than both the average price in WAEMU ($1.06) and the global average price ($1.10). In terms of gasoline prices, Togo ranks 57th out of 163 countries, note that the ranked prices range between $0.02 / litre in Venezuela and $2.04 / litre in Norway.[3]

By January 2015, oil prices had fallen by almost half: ($49 / barrel) compared to the June 2014 figures ($107 / barrel). But, in Togo, this decrease has resulted in a 38% drop in the price of petrol import in dollars. Over the same period, the price of gasoline at the pump in the country fell by only 11% with prices denominated in CFA francs, but by 29% when converted into US dollars! The price of gasoline is expressed in US dollars, and thus the current depreciation of the euro makes it more burdensome to import gasoline (the CFA franc is pegged to the euro).

The CFA franc depreciated by 26% against the US dollar between June 2014 ($1 = 482 CFA francs) and March 2015 ($1 = 605 CFA francs). This has led to a proportional increase in the price of imported gasoline. In other words, the fall in oil prices cannot be directly transferred to the pump price due to other concurring factors, such as exchange rate fluctuations and other variations in the market that determine the final outcome of gasoline imports.

Changes over a long period of time demonstrate a clearer relationship between oil price and gasoline prices. As shown in the histogram on the right in the last 20 years, the pump price of gasoline in Togo has always moved together with fluctuations in crude oil. However, despite similar trends, these price fluctuations differ. Oil prices had more than quadrupled in ten years, from the relatively low price of $13 per barrel in 1998 to $97 per barrel in 2008. But the pump price of gasoline in Togo was doubled over the same period. From 1995 to 2015, oil prices experienced an average increase of 6% per year, compared to a mere 4% rise in the pump price of gasoline.

The Togolese Government contends that, under optimal conditions, the pump price of gasoline would be $1.027 / litre (624 CFA francs) including $0.33 / litre of taxes, which would represent 32% of the price at the pump instead of the current 27%. Thus, the prevailing price of $0.96 / litre in Togo means that the state renounces approximately $0.07 / litre in taxes.

This "opportunity cost" is referred to fictitiously as a "subsidy" and its aggregate could reach US $10 million by the close of 2015 for about 135,000 m3 of gasoline consumed.[4] The Togolese Government does not pay cash to subsidize oil products, but rather operates by making monthly adjustments to the taxes it collects on petroleum products.

Over the past 20 years, Togo has maintained the purchasing power of its population by limiting the impact of fluctuations in oil prices on the price of gas for consumption. However, there is no universal unit of measurement that allows for comparison across different ratios of subsidies for oil products. The universal issue is not to measure, to increase, nor to reduce these subsidies, but rather to determine the effects of oil prices on the share of taxes with regard to the price of gasoline. But this share varies greatly from one country to the next, and it is rarely made public, since many countries simply provide data with the generic term "subsidies." Amounting to 27%, the share of taxes in the pump price of gasoline in Togo is low compared to the average of 45% in OECD countries and that of 55% in European countries. It would therefore be in Togo’s interest to strengthen its communication on the ratio of taxes to justify the price of petroleum products to consumers, especially in the context of tensions with various unions. Such an effort would demonstrate the will to improve governance in Togo's oil sector.


[1] Two ministerial decrees are determining the pump price of oil products, the first one of June 15, 2014 and the second one of March 16, 2015.

[2] Statistics from the Togo Revenue Authority.

[3] www.globalpetrolprices.com.

[4] Togo, Ministry of Finance and Economic Planning, Scoreboard for the Togolese economy, N°134, January 2015.

 


Comments

Carpophore Ntagungira - Togo 25/11/2015 10:35
Réponse aux questions de MM. TEVI-BENISSAN et LAWSON :
Dans un pays A enclavé et sans gisement de pétrole, le prix de l’essence à la pompe compte 15% de taxes et impôts. Les autorités de ce pays A ne considèrent jamais qu’ils aient subventionné le prix du pétrole. Par contre, dans un pays B, le prix de l’essence à la pompe compte jusqu’à 40% de taxes et impôts. Mais, en même temps, ses autorités publient que le prix à la pompe bénéficie d’une subvention de 10%, parce que selon leur entendement le prix de l’essence devrait être taxé à 50%. Pour une nécessité de transparence et de comparaisons des statistiques et des politique fiscales entre pays, il est plus significatif d’indiquer tout simplement que les prix de l’essence à la pompe affichés comportent en réalité 15% et 40% de taxes et impôts respectivement dans les pays A et B. Ceci permet d’éviter l’usage hypothétique du mot « subvention » qui dans le sens commun implique une sortie d’argent de la caisse de l’Etat.
adele - 18/08/2015 04:36
Merci pour l'information. Est ce que la BAD peut conduire une analyse detaillee des opportunites generees par des investissements en energie renouvelable surtout ethanol fourni par les produits et sous produits agricoles.
Martial TEVI-BENISSAN - Togo 22/07/2015 12:29
Merci pour ces détails et ces différentes comparaisons par rapport aux autres pays. Cepndant, il ne faut pas perdre de vue que le niveau de vie n'est pas le même dans tous ces pays. Avec un SMIG aussi bas que le nôtre au Togo, même 0,5$ pour le litre de carburant est excessif. Certains autres pays dans le graphique des prix n'ont même pas de port et doivent supporter des coûts additionels de transport par la route. Alors que le Gouvernement prenne ses responsabilités pour mieux redistribuer "les ressources de l'Etat emprisonnées dans les mains d'une petite minorité". Merci
Louis LAWSON - Togo 17/06/2015 15:48
Dans le souci de réduire la pauvreté par l’amélioration des conditions de vie des ménages, le Gouvernement accorde des soutiens à la politique pétrolière en renonçant de percevoir certains types de droits de douanes sur les produits pétroliers. Le montant du soutien à la politique pétrolière est de 40,4 milliards de FCFA en 2013 contre 42,5 milliards de FCFA et 32,5 milliards de FCFA respectivement en 2012 et 2011. Le but de cette politique est de réduire les prix à la pompe des produits pétroliers aux consommateurs en dépit de la hausse du cours du baril de pétrole sur le marché mondial. Alors n'est pas une subvention? n'est-ce pas ce qu'on appelle les recettes non liquides?
Emmanuel OLOA - Togo 14/06/2015 14:27
Merci à Monsieur Ntagungira pour cet article concis et précis.Il permet de comprendre l e mécanisme du prix de l'essence à la pompe.
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