It stinks oil war in Madagascar

Good news Folks: tomorrow, there will be a decrease of pollution in Madagascar.

Why? All the gas stations in Madagascar will go on strike for half a day. They will stop selling gas and other oil products on Wednesday April 13th, 2011 morning. This is the decision which came out from the extraordinary general assembly of the GPGLSS (association of free owners/managers of gas stations) last Monday.

This demonstration is a kind of warning towards the State (specifically the ministry of mines and hydrocarbon) and the GPM (association of the oil companies in Madagascar). Through such movement of protest, the GPGLSS wants to force the State and the GPM to reach a consensus which will restore peace and stability in the petroleum industry. Indeed, dispute between the ministry of mines and hydrocarbon and oil companies, may severely affect gas stations on their oil supply and profit margin.

There are two kinds of profit margins for gas stations:

  • least of fixed margin: MGA 32;
  • variable margin: between MGA 05 and MGA 16 according to each gas station’s performance and set criterion for each oil company.

The source of that dispute was TOTAL’s decision to increase its prices on some of its oil products on March 03rd 2011. The increase was between MGA 60 and MGA 100 according to the product. Immediate reaction from the government:

Decree on staple commodities

This decree was amended: all oil products legally became staple commodities. Products which are listed in this decree can defer to the competition act which provides that the law of supply and demand has to be the only market’ s rule to set price and does not allow any interventionism from the State. The article n°: 02 of this act provides that the State can take exceptional temporary measures which can exceed 06 months. Such measure has to be cancelled once the situation gets back to normalcy.

Order n°: 4497/2011 on March 03rd, 2011

The ministry of mines and hydrocarbon issued this order which provided that the “Logistique Pétrolière” Company has to reduce its storage cost by MGA 50 per liter, and allowing the ministry to set a cap price for some oil products on sale in Madagascar.

Council of State

The GPM sued the Malagasy State before the Council of State in order to have the order n°: 4497/2011 cancelled. The GPM also asked for the withholding of enforcement of the order. On March 16th, 2011, the Council of State issued its decision on this last request: the request for withholding of enforcement was rejected.

The line of defense of the State was that according to the article n°: 186 of the act n°: 2004-036 of October 01st, 2004 (the act which rules dispute between the State and private individuals), in any case, withholding of enforcement can not be pronounced by the Council of State when the dispute is about a decision which concerns public order, security and quietness.  The order n°: 4497/2011 was described as the only defense against a limitless increase of price of oil products which will make Malagasy people more and more suffer. The order n°: 4497/2011 which is an economic decision was presented and highlighted as a humanitarian work. The order n°: 4497/2011 then remains enforceable until the Council of State issues its final decision on the substance of the case.

Jean Martin Rakotozafy, president of the GPGLSS, in his yesterday press conference, demanded that the GPM and the ministry of mines and hydrocarbon reach a consensus on the oil prices and publicly announce them on the latest Friday April 15th, 2011.


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