Sierra Leone News: Prices of Petroleum Products Rise Sharply

By Stephen V. Lansana

The pump prices of petroleum products in Sierra Leone have increased with immediate effect, the government and Oil Marketing Companies said in a joint statement on Monday.

The joint public announcement is signed by Chief Director & Professional Head Ministry of Trade & Industry, General Manager of National Petroleum (SL) Limited, Executive Chairman of Petroleum Regulatory Agency (P.R.A), Managing Director of Total (SL) Limited, Managing Director of LeoneOil Company Limited and Financial Secretary of Ministry of Finance.

“We hereby announce the following pump price increases with immediate effect: Petrol from Le 7, 000 to Le 8, 500 per litre, Diesel from Le 7, 500 to Le 8, 500, Kerosine from Le 7, 600 to Le 8, 500 and Fuel Oil from Le 6, 500 to Le 7, 500,” they said.

“Following the recent development in the international market of Petroleum Products, the P.R.A, Ministry of Finance, Ministry of Trade& Industry and Oil Marketing Companies (OMCs) have jointly reviewed the pump prices of petroleum products to reflect the recent movements in the platts and foreign exchange rates,” according to the government and the oil marketing companies.

“All OMCs and fuel dealers nationwide are urged to adhere to the above pump price adjustments. The government and OMCs have agreed to reform the downstream petroleum sector in a transparent way of adjusting fuel pump prices that seek the interest of the general public,” they emphasized.

The increase in the prices of petroleum products will have little effect on transport fare in city Freetown if motorists go by the new transport prices announced by the Ministry of Transport and Aviation in collaboration with Divers’ Union, but will have significant impact on provincial transport fare.

The General Manager of NP (SL) Limited, Mr Kobbie Walker said recently at the weekly government press briefing in Freetown that, they have realized that the pump price of petroleum products in the sub regions is currently high [Above Le 9, 000] than Sierra Leone, but Sierra Leone is selling fuel at Le 7, 000 and Le 7, 500 for petrol and diesel, respectively.

As a result, oil marketing companies in Sierra Leone have recorded a loss of Le127 billion.

“The OMCs were currently challenged with two key issues: First is Platt. Platt is quoted for energy products in the world. It is quoted daily, by limits and by second, that is what we do to purchase petroleum products but unfortunately, Sierra Leone is not oil marketing country. So, if the amounts of platt we buy keep going up, it will negatively impact the country. Secondly, the OMCs were challenged in foreign exchange. They buy products in dollars because petroleum products are sold in dollars. We import it and later sell it in Leones. We need to convert that Leones again into dollars so that we will be able to continue the process,” he said.

A representative from the Petroleum Regulatory Agency (PRA), Mr Sallu Kamara explained that on July 13, the government in collaboration with OMCs remove fuel subsidy thereby increasing the pump prices of petroleum products from Le 6, 000 to Le 8, 000 per litre.

“The agreement the government had with the OMCs was that, if there is going to be an increase, the price will increase and if there is any reduction, the price will reduce. So, we monitored the time from July 2019 to January 2019. There was a reduction in the International Market Prices (PLAT). So, the combined effects of PLAT and the exchange rate led us to the situation on January 7, 2019, for us to reduce the pump prices of petroleum products from Le 8, 000 to Le 7, 000 for petrol and diesel from Le 8000 to Le 7, 500 and Kerosine from Le 8, 000 to Le 7, 600 per litre.

Speaking on the trigger mechanism for increment, he said that “for the OMCs to increase prices, the landed cost of the products should have to increase by 5% and if the landed cost reduces up to a minus five percent there should be a reduction in the pump prices, adding that on January 7, 2019, there was a reduction in the landing cost, so that was why the pump price was reduced.”

“From January to March 2019, we realized that the landed cost increased up to plus 5%, meaning, we should have increased the pump prices according to the combined effects of PLAT and foreign exchange,” he said. “If we don’t increase the pump prices, two categories of people will loss: If you decide not to increase, government will lose revenue. Today, if we don’t increase the price, OMCs will lose money. If you don’t want OMCs to lose money, then increase the pump price,” Kamara said.

He emphasized, “If you don’t want to increase the pump price and also OMCs to lose money, then government has to subsidise. Today, if we say we are not going to increase the pump price, then government needs to subsidise up to Le 235 billion from now to December.”

He added that subsidizing will not be sustainable. He said that “presently, the pump price of petroleum products remains the same. We will inform you if there is going to be any increase or decrease.”

The Deputy Minister of Transport and Aviation, Silla Sadiq said that the ministry has engaged stakeholders in the transport sector, assuring that there will still be public transports irrespective of the increase.