Kinshasa, February 12, 2024 – The Government of the Democratic Republic of the Congo (DRC) has announced significant progress in structural reforms within the downstream petroleum sector. These measures are part of an overall strategy to clean up and rationalize petroleum subsidies, aiming to ensure more efficient and transparent management of public financial resources.
Initially, in 2022, the Ministries of Finance and National Economy jointly initiated a comprehensive audit of the Petroleum Products Price Structure (PPPS) conducted by Mazars. The audit findings, released in May 2023, highlighted several reform avenues to improve governance and efficiency in the sector. Based on these recommendations, an action plan is currently being developed.
Furthermore, with an aim to control public spending and align practices with international standards, the Government took proactive measures as early as April 2022. This included excluding the international aviation sector from the subsidy scheme and revising the calculation of foregone earnings. In October 2023, this rationalization was extended to the mining sector, which alone accounted for nearly 20% of the foregone earnings.
These actions are part of a broader goal to gradually reduce the gap between market prices and retail selling prices. The ultimate objective is to reach a situation where petroleum products no longer require structural subsidies, thus ensuring greater economic and financial stability for the country.
In this context of restoring trust in the sector, the government decided to create a new parafiscal charge and successfully raised substantial funds from local banks to refinance a portion of the subsidy arrears accumulated in 2022 and 2023. This transaction, a first of its kind involving a consortium of banks including EquityBCDC, FirstBank DRC, Ecobank DRC, and Standard Bank, aimed to support the national petroleum sector to prevent any supply disruptions, while also allowing the Congolese financial system to innovate through a significant syndication, crucial for the country’s economic development.
