Mozambique’s State-owned Petromoc Granted Near Monopoly on Sale of Aviation Fuel

Mozambique’s State-owned Petromoc Granted Near Monopoly on Sale of Aviation Fuel

Regulating Mozambique’s Aviation Fuel Market

The Mozambican Competition Regulatory Authority (ARC), in a significant move, has granted approval for the takeover of nearly 100% of the country’s aviation fuel business by the publicly-owned fuel company, Petromoc. This decision, while significant, is not without conditions. Petromoc is required to sell at least half of its shares in Maputo International Airport Fuelling Services (MIAFS) within the span of a year. This condition aims to prevent the monopolization of the aviation fuel market and stimulate competition, potentially resulting in lower prices and more options for consumers.

A Shift in Ownership: From Joint Venture to Sole Control

The decision follows the announcement by a British Petroleum (BP) subsidiary in Mozambique to sell its entire share in MIAFS to Petromoc. Prior to this sale, MIAFS was a 50-50 joint venture between Petromoc and BP Moçambique. MIAFS is engaged in operating depots for aviation fuel supply, managing the hydrant line, designing and building fuel storage depots, and providing aircraft refuelling services at Maputo International Airport.

Anticipating Market Concentration

The acquisition of all MIAFS shares by Petromoc could potentially create a dominant position for the company in the aviation fuel market, thereby hindering free competition. The ARC’s directive for Petromoc to sell a significant portion of its MIAFS shares is a proactive measure to prevent a single operator from controlling a significant part of Maputo’s aviation fuel storage infrastructure. This strategic move aims to maintain a competitive market scenario.

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Implications for the Aviation Fuel Market

Should Petromoc become the sole shareholder of MIAFS, it could put the company in a dominant position, thereby creating potential obstacles to free competition. Such a scenario could result in the significant part of Maputo’s aviation fuel storage infrastructure falling under the control of a single operator. This could potentially stifle competition and limit consumer choice.

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A Balanced Market

The ARC’s decision to mandate Petromoc to sell at least half of its MIAFS shares is a strategic move to prevent market concentration and promote competition. This is a significant step in ensuring that the aviation fuel market remains competitive, offering consumers more choices and potentially lower prices. It also signifies the ARC’s commitment to maintaining a balanced market and preventing monopolistic control in crucial sectors of the Mozambican economy.

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