An inevitable new increase in fuel prices

Despite the lack of figures on the situation in Tunisia, certain certainties remain, including the rise in prices of several foodstuffs and products such as fuel.

In fact, the 2022 Finance Act was built on the assumption that the average price per barrel will not exceed 75 dollars per barrel Brent. But today, the average price exceeded $100 per barrel. The price had come close to $130 by March 2022.

However, given the decline in oil exploration and research over the past decade, Tunisia today can only cover about half of its needs.

Knowing that an additional dollar in the price of a barrel represents 140 million dinars (MD) in additional expenses for the Tunisian state, whereas for the fall of the dinar, every 0.01 dinar less compared to the dollar is reflected by 40 million dinars ( MD ). Taking this new price into account, it will be necessary to pay out 8.2 billion dinars in compensation in 2022 (more than the budget reserved for investments), while the forecasts were 2.9 billion dinars (needs that have almost tripled).

Our financing needs in petroleum products (fuel, gas, electricity) increased to 10.2 billion dinars with the increase in prices, when they were 5.2 billion dinars.

In this context, it should be noted that, with regard to compensation, priority was given to the import of grain and especially to the import of wheat.

So, taking into account all of the above as well as demand pressures, everyone still remembers the long queues outside gas stations, fuel prices will rise. Something that was confirmed to us by a source close to the Ministry of Industry, Energy and Mines.

In this context, it must be remembered that an automatic price adjustment formula has been introduced since 2016: that is, when the price per barrel changes, the price at the pump changes accordingly, which has given the last years the opportunity to benefit from certain price reductions.

However, with the significant increase in oil prices, the current price of fuel practiced in Tunisia does not in any way reflect the real price. In fact, the adjustment mechanism has been limited to 3%, so until this point we are far from the real price, and despite the successive increases practiced since the beginning of 2022, the current price remains far from the real price. This points to other increases in the future to reduce the gap, reduce the dedicated compensation and reach the real price.

Concretely, the situation will require a revision of fuel prices, which will be announced as soon as possible.

Thus and to deal with this situation, the authorities are working with the Ministry of Industry, Energy and Mines in the lead to reduce the energy deficit by opting for the rationalization of energy consumption at all levels, especially by moving in the direction of the use of renewable energy.

In addition to the continuation of information campaigns, the Ministry has implemented certain measures, including the promotion of the Prosol-elec project, to support families, especially the most vulnerable, to benefit from the benefits of this socio-economic program, in particular the use of heaters, solar water and reinforcement of the insulation of the roofs of the houses, distribution of energy-saving lamps (four per family).

Other measures, simplification of procedures and acceleration of the implementation of projects for the self-production of electricity from renewable energy, special programs for specific sectors such as agriculture, fishing and tourism, rationalization of consumption, in particular through the maintenance of the transport fleet and the use of new communication technologies , which promotes economical driving and controls the use of fuel in the public sector.

In addition, incentives have been provided for the acquisition of electric cars via duty exemption and a subsidy of 10,000 dinars for the replacement of a thermal vehicle. Added to this is the support offered to companies through free energy audits and the promotion of combined energy production, simplification of procedures and deadlines to benefit from the interventions of the Energy Transition Fund.

The situation of public finances is quite worrying and with the increase in commodity prices, the government has no choice but to raise the prices of certain food items including fuel to contain the damage and be able to offset all public expenditure.

Imen Nouira

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