Petroleum Product Markets in Sub-Saharan Africa Comparative Efficiency Analysis of 12 Countries Contents Abbreviations ..........................................................................................................................ix Acknowledgment .......................................................................................................................i Executive Summary ................................................................................................................ ii Factors Affecting Costs of Supplying Petroleum Products ............................................................. ii Study Description ............................................................................................................................ ii Infrastructure and Market Structure ...............................................................................................iii Policies Affecting Fuel Prices ......................................................................................................... v Gasoline and Diesel Price Levels in December 2008 .................................................................... vii Scope for Reducing Costs ............................................................................................................viii 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 ........................................... 49 Annex 2 Generic Downstream Petroleum Supply Chain ....................................................... 55 Annex 3 Selected Product Specifications .............................................................................. 66 Annex 4 Burkina Faso ........................................................................................................... 71 Annex 5 Côte d’Ivoire ........................................................................................................... 82 Annex 6 Mali ......................................................................................................................... 96 Annex 7 Niger ..................................................................................................................... 107 Annex 8 Senegal .................................................................................................................. 116 Annex 9 Kenya .................................................................................................................... 128 Annex 10 Tanzania .............................................................................................................. 142 Annex 11 Uganda ................................................................................................................ 151 Annex 12 South Africa ........................................................................................................ 158 Annex 13 Botswana ............................................................................................................. 169 Annex 14 Malawi ................................................................................................................ 174 Annex 15 Madagascar ......................................................................................................... 180 Annex Bibliography ............................................................................................................. 188 Figures Figure E.1 Retail Gasoline and Diesel Prices in December 2008................................................ vii 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 ..................................................... iii 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 ............................................................... 18 Table 6 Legal and Institutional Framework in Downstream Petroleum Sector in West Africa .. 21 Table 7 Legal and Institutional Framework in Downstream Petroleum Sector in East and Southern Africa ............................................................................................................................. 22 Table 8 Pricing Policy