The SAMIR oil refinery has been the subject of multiple controversies since its closure in 2015. Today and more than ever, the controversy continues alongside the global energy race sparked by soaring hydrocarbon prices. However, this case remains insoluble. Here’s what you need to know about this refinery.
Heavily criticized in the context of this file, the problems of which are not new, the Ministry of Energy Transition and Sustainable Development (MTEDD) can in no way be held responsible for the situation of a company. in decline, even though its role clearly lies elsewhere.
The mission of the MTEDD consists, in fact, in the regulation of the sector, an initiative to try to find technical solutions to the problem, namely the reconversion of the site, the storage, the environmental impact of the refinery and the questions of safety of the installations. , among others.
In other words, the ministry tries, as much as possible, to “save the furniture” from a situation which is in fact a heavy legacy of two decades of mismanagement and non-compliance with the agreement with the State on the part of the shareholder. Therefore, the only Moroccan refinery has been shut down since August 2015 because of the critical state of its finances and the accumulation of debts? It was declared in liquidation, a year later, in June 2016, generating, along the way, some 800 employees who were victims of this bankruptcy.
Since then, uncertainty is the only certainty when discussing the SAMIR file. The government supports, without hesitation, the relaunch of this important national installation which could once again contribute to national production in a global context marked by unprecedented inflation in fuel prices. On the other hand, the resumption of activity of the refinery is much more complicated.
To relaunch these activities, it is first necessary to think about the state of the equipment which has not been used for more than 7 years, not even for minimum maintenance operations, which will require the injection of several billion dirhams for an upgrade.
On the other hand, and according to sources close to the supervisory department, all the takeover offers that have been presented requested state aid, namely the guarantee of a market share, a limitation of imports… Which means the creation of a new annuity.
In addition, and although it is the only oil refinery in Morocco and one of the main ones in Africa, its refining capacity remains relatively small compared to international benchmarks, in particular refineries installed in Spain, France, Turkey or Middle East. which are 3 to 4 times its size. There is a real issue of refinery competitiveness, in an ultra-competitive globalized market.
Even if we start from the assumption that the Samir is as efficient as its competitors and that the restart is technically possible and financially reasonable, the new owner of the refinery, if he turns out to be a private person, will have no interest to sell the product at a preferential price and will therefore offer it at the international price. Maybe there will be a little difference related to the shipping cost. This is also one of the findings of the report of the Competition Council.
“In this regard, it should be remembered that, during its activity, Samir did not invoice its refined products to the distribution companies on the basis of its production costs and cost price, but on the basis of a formula which guaranteed it a sale price or transfer price ex-refinery (return price at the refinery) equal to that of the imported refined products”, indicates this report.
“Indeed, the transfer price ex-refinery was calculated on the basis of the Platts FOB quotation of diesel and gasoline listed on the Rotterdam stock exchange (international quotation), increased by transport costs to the port of city of Mohammedia, and not on the basis of SAMIR’s production cost and refining cost”, add the document.
This means that the selling price applied on the national market, at the time when the refinery was in operation, was calculated on the basis of the quotations of the refined products at the international level (Platts quotations on the Rotterdam market), increased in particular by the costs transport, insurance, port taxes, TIC and VAT. It is as if Morocco imported all of these refined products (diesel and gasoline in particular) from abroad and that the national refiner did not exist.
Thus and in reality, only the subsidies supported by the general budget of the State made it possible to maintain the selling prices of diesel and gasoline, as fixed by the State, at levels deemed acceptable.
Let us also mention the significant level of pollution around the refinery. For years, the owner refused to make the necessary investments to upgrade the refinery in terms of product quality. For years, SAMIR poisoned Moroccans with diesel with a very high sulfur content (10,000 ppm), while the diesel imported today contains only 10 ppm.
It should be emphasized that the issue of Samir should not be linked to the surge in fuel prices, which is rather related to some malfunctions in the distribution market. The subject of the Samir cannot be exploited for this purpose.
Moreover, and this is also one of the complications, the case of the Moroccan refinery is currently presented to the International Center for the Settlement of Investment Disputes (ICSID), a case under the responsibility of the Head of Government and the ‘Executive is still waiting for an outcome in this sense. Even the judicial liquidation procedure is in progress before the Commercial Court of Casablanca.