P 151603Z APR 09
FM AMEMBASSY ABIDJAN
TO SECSTATE WASHDC PRIORITY 5066
INFO ECOWAS COLLECTIVE PRIORITY
DEPT OF ENERGY WASHINGTON DC PRIORITY
DEPT OF TREASURY WASHDC PRIORITY

UNCLAS ABIDJAN 000239 
 
 
E.O. 12958: N/A 
TAGS: ENRG EFIN ECON PGOV IV
SUBJECT: AUTOMATIC FUEL-PRICING REGIME HAS ITS FIRST IMPACT 
 
REF: (A) 2008 ABIDJAN 452 (B) 2008 ABIDJAN 480 
 
 
¶1. Summary.  On April 14, 2009, fuel prices at the pump in 
Abidjan decreased approximately 4 to 7 percent in response to 
a GOCI mandate.  The decrease was the first change in prices 
made in accordance with a fuel-pricing mechanism the GOCI 
agreed to as part of its IMF program.  End summary. 
 
¶2. Until April 14, 2009, the GOCI set fuel-price caps through 
a largely political process.  When the GOCI needed more cash, 
it raised fuel prices and kept them artificially high even 
when world prices decreased; when political pressure mounted, 
the GOCI lowered prices.  For many months the IMF has pushed 
the GOCI to adopt an automatic pricing mechanism that would 
more closely reflect changes in world prices. 
 
¶3. In its first IMF Emergency Post-Conflict Assistance (EPCA) 
program, approved in August 2007, the GOCI agreed to 
implement a proposed automatic pricing mechanism by December 
31, 2007.  It failed to do so.  In its second EPCA, approved 
in April 2008, the GOCI agreed to implement the mechanism in 
July 2008.  Once again, the GOCI failed to do so.  However, 
on July 7, 2008, the GOCI imposed significant price increases 
on various fuels, in line with increases in world oil prices. 
 Unleaded gasoline prices rose 29 percent; diesel went up 44 
percent; lamp oil rose 17 percent; and cooking gas rose 28.5 
percent (ref A).  In response to the ensuing strike by 
transportation workers and members of the country's largest 
federation of unions, on July 20, 2008, the GOCI reduced the 
price of diesel (the primary fuel for public transportation, 
taxis, and most drivers) and lamp oil by 12.7 percent and 10 
percent, respectively (ref B). 
 
¶4. The IMF continued to insist on an automatic pricing 
mechanism.  In February 2009, with its feet to the fire, the 
GOCI agreed to implement the automatic pricing mechanism as a 
pre-condition for an IMF Poverty Reduction and Growth 
Facility (PRGF) and approval of the enhanced Heavily Indebted 
Poor Countries (HIPC) decision point.  However, the new 
pricing formula had no effect at the pump until April 14, 
when prices for unleaded gasoline fell 3.8 percent, from CFA 
650 to CFA 625 (USD 1.30 to 1.25) per liter; diesel prices 
decreased 6.1 percent, from CFA 575 to CFA 540 (USD 1.15 to 
1.08) per liter; and lamp oil prices fell 6.7 percent, from 
CFA 450 to 420 (USD 0.90 to 0.84) per liter. 
 
¶5. Comment.  The real test of the GOCI's commitment to the 
pricing scheme will come when world oil prices increase 
sharply and the formula requires a corresponding increase, 
both at the pump and in the bus and taxi fares paid by those 
who can least afford it.  End comment. 
 
 
NESBITT