The Competition Council has indicated that the profits of seven leading companies in the fuel distribution market in Morocco amounted to 1.68 billion dirhams annually in the sale of diesel and gasoline alone, during of the past four years.
This is what emerges in any case from the opinion of the Competition Council, published this week, concerning the significant rise in the prices of raw materials and the world market, and its repercussions on the competitive functioning of national markets, regard to the state of hydrocarbons (diesel and gasoline). The Institution notes that the diesel and gasoline distribution activity remains very lucrative in Morocco, given the levels of financial profitability it generates.
The data indicates that Afriquia SMDC’s profits amounted to 497 million dirhams last year, 555 million dirhams for Vivo Energy, 883 million dirhams for Total Energy, 223 million dirhams for Petrom, 305 million dirhams for Winxo, 123 million dirhams for Olea Energy, and 244 million dirhams for Ziz. The cumulative net production of diesel and gasoline produced by the seven companies amounted to around 6.7 billion dirhams during the period between 2018 and 2021, i.e. an annual average of around 1.68 billion dirhams.
In detail, the report reveals that Winxo stands out with a financial rate of return that 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%.
In addition to the companies that made the largest profits, Total Energy and Vivo Energy generated 1.71 billion dirhams each from the sale of diesel and gasoline between 2018 and 2021. The net profit of these companies coming from different activities amounted to 10.7 billion dirhams during the same period, which includes the distribution of diesel and gasoline, in addition to gas, fuel oil and kerosene.
Indeed, the exploitation of data for the 2018-2021 period has revealed levels of profitability which remain very high overall, with nevertheless differences between the companies, can we read on the report. The Council explains these differences in levels of profitability by the differences noted in the heading of investments made by each of these operators and particularly in the development of storage capacities and the distribution network.
The leader, in terms of market share (Afriquia SMDC), made an average amount of investment during the 2018-2021 period of around 319 million DH in the development of storage infrastructure and in the network of stations. -service, while Winxo mobilized only half of the amount of Afriquia SMDC (nearly 185 million DH), specifies the report. According to data provided by Council led by Ahmed Rahhou, the profit margins of distribution companies have seen strong increases in the years 2020 and 2021, exceeding the ceiling of one dirham per liter of gasoline.
Also, to solve this problem, the Council proposed the adoption of a windfall tax which gradually depends on the profits made from the surplus profits of the companies in order to support the social programs of the State. The Institution had indicated that this tax would encourage companies to maintain reasonable profit margins in the event of a drop in prices at international level by the immediate application of these reductions to selling prices on the national market, with the aim of better activating the competition.
Commenting on these figures, Mostafa Labrak, energy economist and managing director of Inergysium consulting, in an interview with Hespress, said that ” considering the annual transaction rate, which is about 6 billion dirhams, and the annual profit rate of 1.68 billion dirhams, the rate of return is about 4.4%, which is too close the interest rate applied by the banks. Labrak further stated that “ the figures announced remain close to the levels before the liberalization of fuel prices in 2015 “. He added : ” When we refer to the profit margins on the materials, we find that they are between 0.350 and 0.368 dirhams per litre. These are normal and somewhat thin profit margins ».
Our interlocutor explained that “the high prices are currently explained by taxes and international markets, in which the prices of petroleum products have increased, due to geopolitical and sanitary conditions”, and underlined that “ the opinion of the Conseil de la concurrence gave a precise idea of the figures and corrected those fictitious which previously circulated on the fuel distribution companies. Indeed, it turned out that it was just shaping. They are unfounded.” adding that“the report is trendless, very positive, as it has given a complete picture of this vital sector with very reasonable figures ».