Megh Pillay, the CEO of the State Trading Corporation (STC) of Mauritius, continued his interview to AfricaMoney on the island economy aspirations to transform itself into a petroleum hub. Our economic expert concluded on the note that petroleum trading, especially in the context of international trade, will contribute towards expanding the economic horizons of Mauritius more than any other single development.
- Jet fuel is an important component of the petroleum products imported by STC. How competitive are the rates quoted by STC to various airlines?
STC is the sole supplier of jet fuel for long and medium haul flights run by all airlines to Mauritius, including but not limited to Air Mauritius. With some 250,000-270,000 tonnes of jet fuel in a year, this is far above the bare minimum quantity. In fact, certain airlines which do not have to stop over in Mauritius to refuel given their flight paths, actually do so. As former CEO of Air Mauritius and understanding the dynamics of the aviation industry in detail, I can safely say that airlines follow a policy of refueling to a bare minimum at the so-called red-listed airports – the ones that are more expensive than the average. We have reason to believe that Mauritius is currently in the blue-listed category of airports, where jet fuel is charged at a low price and gains result from selling higher volumes.
Secondly, our competitive jet fuel prices make us a frontrunner for being chosen by multiple airlines as an alternative airport. Such airports are identified by airlines in case of inclement weather or any other disruption in their normal route. Mauritius being part of such alternative routes benefits from this opportunity as a refueling station.
- The government has adopted a policy promoting the development of Port Louis as a major refueling hub for growing maritime traffic plying between the West and the East via the Cape of Good Hope, across the Indian Ocean. How is STC contributing to this development?
Mauritius is strategically positioned in the middle of the Indian Ocean with increasing Atlantic traffic plying at one end towards Africa, Madagascar and the West, while on the other hand, there is also a steep rise in traffic moving towards India, China, Japan, Malaysia and Thailand – essentially Asia and the Far East – and in both cases, round the Cape of Good Hope.
Today’s new vessels with high speeds and perishable cargo cannot afford, and indeed do not need to wait and stand in queue to refuel at the Suez Canal bottleneck. Moreover, they cannot afford to bypass a refueling hub altogether as this would imply stocking higher quantities of fuel at the expense of more valuable cargo in their hold. Mauritius is a viable port of call for refueling vessels, resting their crew, allowing them to go onshore and to stock up on fresh water and fresh food. This, in turn, would also have a multiplier effect on consumption in the island economy.
STC plays a critical role in this development, as we are the sole importer and supplier of petroleum products in Mauritius. At the same time, we strongly support the government’s initiative to liberalize the market – expert players that are engaged in the supply of oil to ships would be best placed to tap into the opportunities arising from the development of Port Louis as a major refueling hub for maritime traffic.
- Can you comment on the latest LPG storage facility launched by Petredec? Finally, how is Mauritius poised to transform itself into a petroleum hub?
Petredec is a big, global trader in LPG and their zeroing in on Mauritius to launch the largest on-shore storage facility for LPG of this type in all of Africa, is certainly a big boost to the island. Commercially, a big component in LPG supply is the cost of freight. If Petredec wins a contract to supply LPG to Mauritius, it will be in position to stock large quantities of LPG in Mauritius and supply it to other African countries with port facilities. In the past, Petredec had kept a floating storage that involved higher recurring expenses. The recent on-shore facility materialized in response to forecast for greater LPG demand over the long term.
As to how Mauritius is poised to transform itself into a petroleum hub, the island economy has a lot of potential to serve as a one-stop halt for vessels going to smaller ports in the region. For instance, a big player had envisaged a floating petroleum hub in Mauritius stocking several categories of petroleum products, to cater for such ships. The situation is conducive for the setting up of such a facility, but it would involve huge investment. What cannot be denied however is the positive impact it would have on the economy. Petroleum trading, especially in the context of international trade, will contribute towards expanding our economic horizons more than any other single development.
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