Like Nigeria, Angola cuts petrol subsidy ‘to promote economic growth’

Angola says it has decided to reduce its spending on petrol subsidy, according to a report by Bloomberg.

After the cabinet meeting on Thursday in Luanda, the country’s capital, Manuel Junior, minister of state for economic coordination, said the subsidy reduction will take effect from Friday.

He said this would lead to an increase in the price of petrol from the current 160 kwanzas (about $0.27) per litre, to 300 kwanzas (about $0.51) per litre.

The change in price represents an 87.5 percent rise, starting from 1.00 am, on Friday.

Subsidies on other petroleum products, such as diesel, cooking oil, and gasoil (a type of diesel), will remain unchanged, he said.

The minister said the removal of petrol subsidy is “a necessary measure to promote solid economic growth capable of addressing the serious problems facing the country”.

Junior said Angola’s expenditures on fuel subsidies amounted to $3.8 billion in 2022.

On her part, Vera Daves, Angola’s minister of finance, said removing the petrol subsidy was a sovereign decision of the Angolan state and was not influenced by external pressure from the International Monetary Fund (IMF).

According to a government report obtained by Xinhua, Angola’s ministry of finance had put forth a proposal for a phased reduction of petrol subsidy beginning in the second quarter of 2023.

The report also recommended a gradual and progressive removal of the subsidy on diesel and illuminating oil prices, with the process projected to last until 2025.

Angola has the fourth-lowest petrol prices in the world ($0.28) after Libya, Iran, and Venezuela, according to data compiled by Globalpetrolprices.com.

According to a report released on May 11 by the Organisation of the Petroleum Exporting Countries (OPEC), Angola is Africa’s top crude oil producer, with production averaging 1.06 million barrels per day in April.

POST-SUBSIDY EFFECTS PERCOLATE NIGERIA

The country’s petrol subsidy cutback comes at a time when Nigeria, Africa’s major oil-producing country, is experiencing post-subsidy realities.

President Bola Tinubu, in his inaugural speech on May 29, made a pronouncement that the petrol subsidy payments had stopped.

However, the president’s media team later clarified that the implementation of the policy would commence this month.

But the Nigerian National Petroleum Company (NNPC) Limited said it adjusted the price of petrol, across its retail outlets — a situation typical of a subsidy-free regime.

The national oil firm said the adjusted pump price was in tandem with market realities.

Explaining the rationale behind NNPC’s move, Mele Kyari, the national oil company’s group chief executive officer (GCEO), said the removal of the petrol subsidy would promote competition and regulate consumption.

“The prices we are seeing today at our station are the current market price of the commodity. So, what this means is that prices in the market can go down at any time and of course, the market will adjust itself,” he had said.