Rising fuel costs could affect everything – freight prices, docking fees, tourism, food, transport and factories, the energy regulator says.
Fuel shortages caused by the war in the Middle East could knock up to three percent off African economies if they persist, a top regional energy regulator told AFP on Friday.
“There is a little bit of panic,” said Geoffrey Aori, CEO of the Regional Association of Energy Regulators for Eastern and Southern Africa.
Rising fuel costs ‘will affect everything’
Global oil prices have shot past $100 per barrel this week as shipping through the vital Strait of Hormuz has come to an effective standstill, and Iran has struck energy facilities in the Gulf.
Aori said most African countries could already expect losses to GDP of between 0.5 and one percent.
“But if the war persists for a month or more that can mean two to three percent,” he added.
Rising fuel costs “will affect everything: freight prices, docking fees, tourism, food, transport and factories.”
Time is also running out: most African countries have fuel reserves for just 15 to 25 days, compared to the International Energy Agency standard of 90 days.
Aori cited the example of his home country, Kenya, which has 20 days of reserve capacity.
Its government has promised there is enough fuel to last until the end of April, but Aori said that was only possible with rationing and a ban on exports to neighbouring countries.
“A new shipment must arrive within 30 days from today,” he said.
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‘Wake-up call’ for Africa
African governments must mitigate the impact with immediate fuel rationing, and subsidies to cushion the blow of inflation and weaking currencies, though that was not sustainable beyond a few weeks, he said.
The war should serve as a “wake-up call” for the continent, he added, calling for investment in alternative energy sources such as hydrogen and methanol, and more use of electric vehicles.
“We are over-reliant on oil and these wars are not ending soon.”
There have been attempts to construct more refineries on the continent, and expand reserves, but infrastructure costs run into the billions of dollars at a time when countries have many competing demands and heavy debt burdens.
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