Last April, the Conseil de la concurrence took the matter of its own motion for an opinion in order to examine the impact of the surge in the prices of inputs and raw materials recorded at world level on the competitive functioning of national markets. It is in this context that this opinion was issued.
Conclusions
In its opinion, the Competition Council delivers several conclusions. He certifies that the market is entirely dependent on imports, with “high concentration” in the import and storage markets, the level of which is generally below the threshold provided for by the regulations. Concentration also affects distribution.
An immediate impact of increases in international quotations and staggered over time in the event of declines
In general, notes the Council, the selling prices of the distribution companies are fixed by the operators once every fortnight. However, during certain periods, operators applied two or more upward selling price changes per fortnight. This was the case during the months of March, April and July 2022. The discrepancy observed between the variations in the Platts quotations for refined products and the selling prices on the national market can be explained by the fact that the operators pass on price increases immediately. That said, in the event of declines, they first seek to dispose of the stock of products previously purchased at a higher price and are even tempted to consolidate their margins, or even increase them.
A “lucrative” fuel distribution business
The diesel and petrol distribution activity remains “very lucrative”, writes the Council, and this in view of the levels of financial profitability it generates. Indeed, the analysis of data for the 2018-2021 period has revealed levels of profitability which remain very high overall, with, however, differences between the companies.
The calculated profitability ratio is equal to the ratio between the net results and the shareholders’ equity as they appear from the balance sheets of the companies concerned. Thus, the Winxo company is differentiated by a financial rate of return which generally exceeds 60%, followed by Vivo Energy Morocco with a high rate of between 44 and 52%. On the other hand, the Petrom and Ola Energy Maroc companies posted a rate of return not exceeding 20% during this period. Afriquia SMDC saw its financial rate of return fluctuate between 11.5% and 22%. The differences in the levels of profitability observed among the operators are mainly explained by the differences noted in the section of the investments made by each of these operators, in particular in the development of storage capacities and the distribution network. For example, the leader in terms of market share (Afriquia SMDC) made an average amount of investment during the 2018-2021 period of around 319 MDH in the development of storage infrastructure and in the network. service stations while Winxo mobilized only nearly 185 million dirhams, almost half the amount of Afriquia SMDC. Vivo Energy Morocco has invested 285 MDH.
The virtues of returning to refining are not proven
Among the many recommendations of the Council, particularly in terms of regulatory overhaul, the Council also recommends studying the advisability of maintaining and developing a refining activity in Morocco, although “in the absence of data on its real costs of refining, its cost price, its margins and its profitability, it would be difficult to decide, in the current state of things, on the advisability of maintaining and developing a refining activity in Morocco”.
The Council also recommends ruling out any possible return to direct subsidy.
List of conclusions and recommendations