This is the end of a series that lasted more than five years. Thursday, November 23, the Competition Council of Morocco imposed on nine oil companies – including the three giants of the local distribution market, the French TotalEnergies, the Moroccan Afriquia and the Anglo-Dutch Vivo Energy (Shell) – a global fine of 1.84 billion dirhams (more than 165 million euros) for anti-competitive practices.
In a press release, the authority reports “agreements” with these nine companies, putting an end to a matter which caused a lot of ink to flow in the kingdom and took a political turn, the majority shareholder of Afriquia being none other than the businessman and current head of government Aziz Akhannouch (who came to power in 2021). In addition to the fine, these agreements provide for “a set of behavioral commitments” to which these companies will have to submit in order to “improve the competitive functioning of the hydrocarbon market in the future”.
The fact remains that the amount of the sanction appears low – “ridiculous”, reacted the economist Mohammed Benmoussa on Twitter –, given the turnover and profits generated by these companies in the country, but also the sanctions that had recommended by the Competition Council in 2020. The latter then ruled on a fine of 9% of their annual turnover achieved in Morocco, according to information which had leaked to the press, before accusations of irregularities in the procedure put an end to the decision. In the process, its president, Driss Guerraoui, was dismissed from office.
Colossal profits
“9% of the cumulative turnover of distributors, this represents six to seven billion dirhams (543 to 634 million euros), or at least four times more than the reduced transactional fine announced on Thursday, which only serves “to close the file”, estimates Omar El Hyani, member of the political bureau of the Democratic Left Federation (FGD) and a good expert on the file. Between them, Total and Afriquia recorded a turnover of 29.2 billion dirhams (2.6 billion euros) in 2022. “There remains an aftertaste of unfinished business, and above all a feeling of disproportion between the crime and the punishment,” the weekly TelQuel judged on Thursday.
A non-oil producing country, Morocco is entirely dependent on its imports. For a long time, the State subsidized fuels, having a compensation fund which made it possible to cushion increases in barrel prices. This mechanism was gradually eliminated between 2013 and 2015. During the same period, the sector was liberalized: since 2015, the State has left it to importers to freely set prices at the pump. According to its detractors, this reform has resulted, in the absence of any regulation and control, in an oligopolistic situation, where the three major distributors share more than 60% of the market, set prices as they wish and make profits deemed colossal and illegitimate.
In 2018, a parliamentary report revealed that hydrocarbon distributors had earned 17 billion dirhams (1.5 billion euros) in additional profits compared to what they earned before the state’s disengagement. These additional margins would have reached “45 billion dirhams” (around 4 billion euros) over the period from 2016 to 2021, according to experts from the “Damir” citizen movement, who continued the exercise.
Rising prices at the pump
The controversy resurfaced with a vengeance in 2022 in a context of soaring oil prices after the outbreak of the war in Ukraine, exposing Aziz Akhanouch to strong criticism due to his dual role as political leader and hydrocarbon tycoon, fueled by suspicions of conflicts of interest. In Parliament, the head of government described the excessive profits denounced by opposition deputies as “lies”. Distributors’ margins are “at the same level, if not below, those from which they benefited before liberalization”, the Ministry of the Economy also assured Le Monde in June 2022.
Since then, prices at the pump have continued to peak at record levels (around 14 dirhams per liter in November) to the detriment of households and small and medium-sized businesses, in a country where the level of poverty and social inequalities have not. stopped getting worse since the health crisis. To mitigate inflation, the Moroccan government has supported the road transport sector since March 2022. But he remains criticized for his lack of commitment to structural reforms. In particular, he ruled out a return to fuel subsidies, just as he rejected the proposal, emanating from political parties and unions, to cap distributor margins or reduce taxation on petroleum products.
The executive has not yet responded to calls for the State to take control of the kingdom’s only oil refinery, Samir, placed in judicial liquidation in 2016. For its “safeguard front “, restarting this refinery – which covered 60% of national refined oil needs – would make Morocco less vulnerable to external shocks, bring in competition and lower prices at the pump, as a counterbalance to the hegemony of the three oil giants.