The State of Niger will be able to significantly reduce fuel prices after loan rates were reduced by China.
The West African state has been in the grip of social unrest of over the price of fuel at the pumps, including locally produced fuel. With the unrest becoming increasingly hostile, even leading to fatalities, the government is hoping a seven percent reduction in pump prices at the beginning of 2013 will help ease the tensions.
The price cut will be made as a result of an agreement with China's Export-Import Bank to cut its interest rate on a $980m loan made to Niger to cover the cost of construction of Niger's only 20,000b/d oil refinery which began production at the end of 2011. Now, the State will repay the loan on a 2% rate over 20 years but will retain its 40% stake in the refinery - the other 60% being held by China's CNPC.
The result will be a 40 Congolese Franc per litre reduction in fuel, which currently costs 579 francs/litre (US 63c). However, Niger's Trade Minister claimed that in sanctioning the price cut, the state stands to lose some 14.5bn Francs ($28.4m) in revenue. Taxes on other oil-related products will be reduced by 3% to 12% from next year.