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Kenya to end ‘unsustainable’ fuel subsidy as global oil prices surge

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With the surge in oil prices in the global market, the Kenyan government says it will gradually raise its domestic fuel prices while working to end its subsidy program that is becoming more and more ‘unsustainable’.

The Cabinet Secretary of the National Treasury, Ukur Yatani, who made the disclosure in a statement on Wednesday in Nairobi, said the government had allocated 100 billion shillings (about $852 million) for the fuel program in the financial years 2021/2022 and 2022/2023, but noted that the subsidy will gradually be reduced and removed in the long run.

“With the rising fuel prices globally, however, the new fuel costs could eventually surpass this allocation in the national budget thus escalating public debt to unsustainable levels and disrupting the government plans to reduce the rate of debt accumulation,” the statement said.

“For this reason, a gradual adjustment in domestic fuel prices would be necessary in order to progressively eliminate the need for a fuel subsidy within the next financial year,” it said.

Since the beginning of this year, fuel has accounted for 20 percent of Kenya’s import bill, with higher prices exposing Kenyans to imported inflation.

But the current surge of global fuel prices means revenue has hit high levels which were last seen in 2008, with the cost of the commodity rising 50 percent between December 2021 and May, according to Yatani.

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Ghana’s economic recovery threatened as IMF team’s staff-level agreement delays

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Ghana’s Finance ministry has revealed that the country’s economic recovery efforts could set for delay and complications.

An official the position known on Wednesday, adding that if a visiting team from the International Monetary Fund (IMF) leaves without a staff-level agreement next week.

The country’s director of Treasury and debt management, Samuel Arkhurst told journalists that the IMF had “nothing to do” with Ghana’s decision to undergo a domestic debt restructuring.

Arkhurst revealed that the consequences for those who do not voluntarily participate in the domestic bond exchange were still being negotiated, but there were no plans to go to parliament to force domestic bondholders to participate.

“If the holdouts are large, we will be in trouble,” Arkhurst told reporters.

“The government reserves the right to ensure that non-tendered eligible bonds do not benefit from their non-participation to the Domestic Debt Exchange, including through additional regulatory measures or a more coercive approach,” said a slide presented at the briefing.

The country is currently battling debt, 20-year-high inflation, a weak currency, and rising inequality.

The country’s currency, Cedi was the world’s worst-performing in 2022 as investors continued to squeeze foreign capital into the West African country.

As part of its many initiatives to out of its current economic challenge, Ghana recently ordered all large-scale mining companies to sell 20% of their entire stock and asked the companies to pay the Bank of Ghana with refined gold at their refineries from Jan. 1, 2023.

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Israel-based oil and gas firm, NewMed, signs exploration deal with Morocco’s energy ministry

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Israel-based oil and gas firm, NewMed has signed a deal with Morocco’s energy and mining ministry and Adarco Energy for offshore natural gas exploration and production in Morocco.

NewMed made the announcement on Tuesday adding that it will collaborate with Adarco, and each will have a 37.5% stake in the Boujdour Atlantique licence.

NewMed CEO Yossi Abu said, “for a long time now we have recognised a huge potential in Morocco for collaborations in both the natural gas and renewable energy sectors.”

According to the deal, the remainder of 25% is granted to Morocco’s National Office of Hydrocarbons and Mines, in accordance with the Hydrocarbon Law of Morocco.

NewMed is the main stakeholder in Israel’s huge Leviathan offshore gas field and is looking to merge with Capricorn Energy to create a gas producer focused on Israel and Egypt.

Statista reports that in 2020, approximately 23.3 billion Moroccan dirhams (MAD) of gas and fuel oils were imported into Morocco. This was equivalent to 2.6 billion U.S. dollars and represented a decrease from the previous year when roughly 38.8 billion MAD (4.3 billion U.S. dollars) of oils were imported into the country.

Overall, Spain was the main trade partner in Morocco in terms of gas and fuel oil imports.

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