By Amin Kef Sesay
It is an incontrovertible fact that petroleum products are key to human existence which is why their availability on the market and affordability in accessing them are very significant for the socio-economic well-being of any nation. Some have even postulated that accessibility and affordability of petroleum products have the tendency to seat or unseat any political administration depending on which trajectory it affects standards of living. Whenever prices shoot up the citizenry blames the Government, thereby making it unpopular. On the inverse, when the prices remain stable or fall down, the citizens praise the Government and make it popular.
Sierra Leone continues to use a pre-defined petroleum price structure in a single pricing window using the principle of full-pass-through.
It is important to note the incontestable fact that the pump price of petroleum products, including petrol, diesel, kerosene etc in the country, is efficiently determined by a +/-5% trigger mechanism of the landed cost, that is the cost of landing the shipped petroleum products in the country and that is mostly driven by the combined effect of the International Oil Reference Price (Platts) and available as well as accessible Foreign Exchange.
It must be underscored at this juncture that due to the COVID-19 pandemic that negatively impinged and even continue to impinge on international trade there were abnormal situations when Sierra Leone recorded a shock in the trigger mechanism warranting a hike in the pump prices.
However, in order to prevent additional hardship on the populace which an increase in the pump price may have caused, the SLPP led Government headed by President Julius Maada Bio applied an intervention approach to cushion that negative effect on the general public, an intervention which amounted to significant fiscal impact between the months of May-Dec 2020 and Jan-May 2021. The Government provided 66 billion Leones as subsidy for May-December, 2020 and 21 billion Leones for the month of January 2021.
Again it is worthy of consideration, according to an investigation conducted by this medium, that even though the pump price for the month of this June 2021 should have been Le9,500 the key players within the petroleum sector in the country collaborated and agreed to keep the price at Le8,500 until the subsequent or next monthly review.
Our investigation further revealed that though the current pump price remains one of the lowest within the West African Sub-Region there is the likelihood or tendency that there will be a significant change in the market forces which will definitely affect the price in the not too distant future.
Research has also revealed that Goldman Sachs, a reputable international business entity, forecast Oil Price increase in 2021.Without any iota of doubt the increase will pose serious implications to West African countries, Sierra Leone not being an exception.
Computed pump prices in the sub-region indicate an increase in the price for all petroleum products largely impacted by the sustained volatility in the petroleum reference prices in the Global Markets.
A run-down of the prices of petroleum products on a comparative basis of former regional fuel price converted in Le/Litre-as 31st May, 2021 taking into consideration Sierra Leone, Guinea, Liberia, Ivory Coast, Ghana and The Gambia are as follows: Petrol– Sierra Leone Le 8,500.00, Guinea: Le 9,450.00, Liberia: Le 7,879.33, Ivory Coast: Le 11,728.05, Ghana: Le 11,240.11, The Gambia Le 11,453.17.
For Diesel the comparison are as follows: Sierra Leone: Le 8,500.00, Guinea: Le 9,450.00, Liberia: Le 9, 192.49, Ivory Coast Le 11, 728.05, Ghana: Le 11, 172.45, The Gambia: Le10,904.09.
In terms of Kerosene the comparison is as such: Sierra Leone :Le 8, 500.00, Guinea -, Liberia: Le13, 279.25, Ivory Coast Le10, 583.85, Ghana: Le9, 076.84, The Gambia: Le 8,573.04.
The Exchange Rate source is the Bank of Sierra Leone as at June, 3rd 2021.
It is obvious that the price increase in the global market will inevitably lead to multiplier increase in the prices of consumer products and services as it had been established.
