Petroleum Product Markets in Sub-Saharan Africa Comparative Efficiency Analysis of 12 Countries 2009 Contents Abbreviations ............................................................................................................................i Acknowledgment ..................................................................................................................... ii Executive Summary ............................................................................................................... iii Factors Affecting Costs of Supplying Petroleum Products ............................................................iii Study Description ...........................................................................................................................iii Infrastructure and Market Structure ............................................................................................... iv Policies Affecting Fuel Prices ........................................................................................................ vi Gasoline and Diesel Price Levels in December 2008 ...................................................................viii Scope for Reducing Costs .............................................................................................................. ix Chapter 1: Background ............................................................................................................. 1 Study Description ............................................................................................................................ 2 Petroleum Product Supply Chain .................................................................................................... 4 Factors Affecting Price Levels ........................................................................................................ 6 Chapter 2: Overview of Downstream Petroleum Sector ........................................................ 10 Petroleum Product Consumption ................................................................................................... 10 Refining Capacities ....................................................................................................................... 11 Supply Infrastructure ..................................................................................................................... 12 Market Structure ............................................................................................................................ 18 Chapter 3: Policies that Affect Price Levels .......................................................................... 19 Legal Framework .......................................................................................................................... 19 Pricing Policy ................................................................................................................................ 23 Procurement .................................................................................................................................. 30 Policy toward Domestic Refineries ............................................................................................... 31 Chapter 4: Observations ......................................................................................................... 33 Fuel Shortage ................................................................................................................................. 33 Refining ......................................................................................................................................... 34 ―Natural Monopoly‖ ...................................................................................................................... 34 Transporting Petroleum Products .................................................................................................. 35 Competition ................................................................................................................................... 36 Price Control ................................................................................................................................. 36 Overall Legal Framework and Enforcement ................................................................................. 37 Valuation of Cost Reduction Potential in West Africa .................................................................. 38 Conclusions ................................................................................................................................... 39 References .............................................................................................................................. 41 ANNEXES ................................................................................................................................ 43 Annex Abbreviations and Acronyms ..................................................................................... 44 Annex Units ............................................................................................................................ 48 Annex 1 Organizations Met and Web-based Information Used ........................................... 50 Annex 2 Generic Downstream Petroleum Supply Chain ...................................................... 56 3.1 Overview of World Petroleum Markets .............................................................................. 59 3.2 Procurement Practices ........................................................................................................ 65 3.3 Lag Time in the Oil Product Supply Chain and Implications for Pricing ........................... 67 Annex 3 Selected Product Specifications .............................................................................. 69 Annex 4 Burkina Faso ........................................................................................................... 74 Annex 5 Côte d‘Ivoire ........................................................................................................... 85 Annex 6 Mali ......................................................................................................................... 99 Annex 7 Niger ..................................................................................................................... 110 Annex 8 Senegal .................................................................................................................. 119 Annex 9 Kenya .................................................................................................................... 132 Annex 10 Tanzania .............................................................................................................. 146 Annex 11 Uganda ................................................................................................................ 155 Annex 12 South Africa ........................................................................................................ 163 Annex 13 Botswana ............................................................................................................. 175 Annex 14 Malawi ................................................................................................................ 181 Annex 15 Madagascar ......................................................................................................... 188 Annex Bibliography ............................................................................................................. 197 Figures Figure E.1 Retail Gasoline and Diesel Prices in December 2008............................................... viii Figure 1 Gasoline and Diesel Prices between 2004 and 2009 ....................................................... 2 Figure 2 Petroleum Product Supply and Distribution Chain ......................................................... 4 Figure 3 Impact of Market Size on Price Levels ........................................................................... 6 Figure 4 Sector Structure and Policies Affecting Price Levels...................................................... 9 Figure 5 Demand by Product and Country in 2007 ..................................................................... 10 Figure 6 Monthly Retail Gasoline Prices in West Africa ............................................................ 26 Figure 7 Monthly Retail Kerosene Prices in West Africa ........................................................... 26 Figure 8 Monthly Retail Diesel Prices in West Africa ................................................................ 27 Figure 9 Retail Gasoline Prices in December 2008 ..................................................................... 28 Figure 10 Retail Diesel Prices in December 2008 ....................................................................... 28 Tables Table E.1 Study Coverage of Sub-Saharan African Countries ..................................................... iv Table 1 Study Coverage of Sub-Saharan African Countries ......................................................... 3 Table 2 Oil Refineries in Study Countries ................................................................................... 11 Table 3 Supply Arrangements and Logistics Infrastructure in West Africa ................................ 16 Table 4 Supply Arrangements and Logistics Infrastructure in East and Southern Africa ........... 17 Table 5 Market Structure Features of Study Countries 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