It is confirmed. The State Procurement of Madagascar (SPM) becomes the State's arm in hydrocarbon imports. It is the entity authorized for this purpose, in accordance with the provisions of the petroleum downstream law, declared constitutional on August 3 and subsequently promulgated. Guilo Ramilison, general director of SPM, is pictured with Kola Adesina, general director of Sahara Power Group, a Nigerian company.
SPM's first operation in the petroleum sector concerns the import of 64,000 metric tonnes of diesel from Nigeria for Jirama. A shipment that, barring any changes, arrived today at the port of Toamasina. According to explanations provided, this import implements a government-to-government agreement between Madagascar and Nigeria. It results from discussions between Colonel Michaël Randrianirina, head of state, and his Nigerian counterpart, President Bola Ahmed Tinubu, in Abuja, Nigeria's capital, during his official visit in early June.
Upon returning from this official visit, the occupant of Iavoloha had announced the imminent signing of a fuel supply agreement with Nigerian authorities. "(...) The government-to-government agreement between the Malagasy State and the Nigerian State is now formal," confirms an explanatory note shared by SPM. It specifies that it covers, among other things, securing Madagascar's fuel market against global tensions and logistical uncertainties. The objective would thus be to enable the country to maintain a strategic stock, particularly for Jirama.
SPM's creation was approved at the Council of Ministers in November 2019. Operational a few months later, it plays a regulatory role in the essential products market. Fuel imports were already among its intended missions since its creation. The petroleum downstream law and the requisition of Jirama, decreed Friday, now formalize its entry into the petroleum sector.
Competitive Prices
"Jirama is requisitioned to conclude a contract for the supply and purchase of diesel intended to fuel its electricity generation plants from the State Procurement of Madagascar," states the decree adopted Friday at the Council of Ministers. The objective would be to reduce Jirama's production costs through fuel prices provided by SPM presented as "the most competitive on the market, even when including all taxes," and to optimize deliveries "to help Jirama combat fuel theft."
According to Guilot Ramilison, general director of SPM, the company "intends to fully play its role as market stabilizer. It will therefore no longer limit itself to rice price regulation. Ultimately, the objective is to contribute to Madagascar's energy supply at competitive prices which, in turn, will improve household purchasing power and the competitiveness of businesses and economic actors." He emphasizes that "fuels are also an essential, even vital, element for socio-economic life."
The SPM general director also indicates that as a public regulatory body, the company implements State policy on strategic products and essential goods. He explains that SPM's first diesel import for Jirama stems from the energy emergency declared by the State due to fluctuations in oil prices on the international market, a consequence of the Middle East conflict.
"If Jirama buys diesel even a few hundred ariary per liter cheaper, the difference will be significant for improving its production costs. And thanks to the government-to-government agreement between Nigeria and Madagascar, this difference in diesel selling price to Jirama, made possible by SPM, is real," defends Guilot Ramilison. He emphasizes that the company "can obtain competitive prices from international suppliers (...) through direct negotiations."
The explanatory note shared by SPM also provides details on the logistics aspect of hydrocarbon imports, particularly regarding storage of ordered shipments. The company reportedly signed a contract with Galana Raffinerie Terminal (GRT). The petroleum downstream law also grants it "free and non-discriminatory access rights to essential infrastructure." GRT also conducts quality analyses. "As for SPM, it must pay reception, storage and passage fees to GRT like any other fuel importer," the document emphasizes.
Garry Fabrice Ranaivoson