Maldives set to spend more on fuel in 2022
With supply chain uncertainties compounded by a Europe in conflict Maldivians should expect to pay a higher price for fuel.
Source - Fuel Supply Maldives
The major components of a typical monthly import bill of the Maldives consist of fuel, food items, machinery, mechanical & electrical appliances, and products of the chemical or allied industries. On average over the past five years, the country imported 330,000 barrels of diesel, and spent almost USD30 million on fuel every month. On annual terms, the total fuel bill amounts to about 15 percent of total imports. The three major categories of fuel imported are petrol, diesel and cooking gas.
Petrol is mainly used in land and marine transport. Maldives imports petrol primarily from four major countries: Malaysia, Oman, Singapore, and the United Arab Emirates. On average 500,000 barrels of petrol are imported per year. Pre-COVID, in 2019 the country spent USD59 million on petrol imports, with a significant fall in 2020 to USD28 million, given the impact of the pandemic on the economy. Estimated spending in 2021 is at USD 49 million. With the Russia-Ukraine war, and the expected surge in prices, it is estimated that USD63 million will be spent on the import of petrol in 2022.
Diesel is the major fuel imported for use in electricity generation, with over 4.3 million barrels imported in 2019. On average over the past five years, the country spent USD297 million per year on the import of diesel, with the highest annual spending recorded in 2019 with USD352 million. The estimated spending in 2021 is USD344 million, and it is estimated that this will increase to USD431 million in 2022.
Cooking gas is imported mainly from the UAE, Singapore and Oman, with imports from India, Saudi Arabia and Sri Lanka in 2021. On average about 15,000 metric tons of cooking gas, valued at an average of USD10 million is imported per year.
With the rise in global oil prices, an estimated USD63 million will be spent on petrol imports, USD431 million on diesel, and USD12.4 million on cooking gas. This means that over USD507 million will be required to finance fuel imports, accounting for almost 20 percent of total import bill for 2022.
World oil prices jumped following Russia’s military aggression against Ukraine, with Brent crude surpassing USD100 per barrel. This is reportedly the first time since 2014 it has passed USD100. As at 02 March 2022, Brent crude futures was at USD 113.65 per barrel. Future price hikes may very well depend on the outcome of the Russia-Ukraine war, and will result in major implications for the Maldivian economy.
