By Amin Kef Sesay
Indeed, it is only out of ignorance that some people think that it is Government that should have a domineering role in terms of having control over the pump price of fuel in this country. Such a perception is totally erroneous but unfortunately rife which is why whenever there is an increase in the price of petroleum products the blame is heaped on the Government.
The Government, through the Petroleum Regulatory Agency (PRA), only ensures that oil or petroleum marketing companies in the country operate according to laid down national laws and acceptable international best practices instead of just acting according to their whims and caprices with little consideration given to the effects on consumers.
It is, however, seen as a moral responsibility of those in the knowing of the dynamics within the petroleum landscape, at the global level, to properly educate the rest of mankind of what is actually prevailing within that purview.
To take the discourse to another level it could be a misnomer not to say Government has no role to remedy petroleum volatile situations. This is more so when cognisance is taken of efforts that should have been taken to build the necessary infrastructure, one key one is adequate storage facility to ensure that we have huge stock of those products that could last for a considerable period of time. Also, robust actions must be taken to discourage smuggling of fuel that sometimes leads to artificial scarcity.
In terms of the first such should have been done by successive Governments, as it is indeed very capital intensive to construct jetties, storage facilities etc and with the second due to the porosity of our orders it will continue to be an herculean task for anti-smuggling personnel albeit situations that are compromised via bribery
In this country the marketing of petroleum products is mainly done by privately owned companies though there is a State regulatory institution which, from time to time, ensures that sanity prevails within the petroleum landscape. Government sometimes steps in to give subsidies in order to absorb the shocks that emanate from the changes in market forces which have tendencies of affecting the pump price so that the cascading effects will not be overbearing for the ordinary man in the street. The rate and manner in which the Government will continue to sustain leveraging subsidy could largely depend on how much Government is able to fiscally mobilize during a specific period of time.
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 is 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.
