Sierra Leone News: Prices of Petroleum Products to Surge
By Stephen V. Lansana
The pump price of petroleum products in Sierra Leone is expected to increase in not too distance future, the Public Relations Manager of Oil Marketing Companies (OMCs) who doubles as the General Manager of National Petroleum Sierra Leone said Thursday.
Mr Kobbie Walker made this comment during the weekly government press briefing held on Thursday June 27, 2019, at the Ministry of Information and Communication conference hall at Youyi Building in Freetown.
He said that they have realized that the pump price of petroleum products in the sub regions is currently high [Above Le 9, 000], 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 has recorded a loss of Le127 billion.
“We are currently challenged with two key issues: First is Plat. Plat 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 plat we buy keep going up, it will negatively impact the country. Secondly, we are challenged in foreign exchange. We 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.
“The price for petroleum products will increase because the key factors that determine petroleum products have negatively affected us, the Oil Marketing Companies (OMC),” Mr Walker 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 he ministry has engaged the stakeholders in the transport sector in relation to the current situation of petroleum products, adding that the OMCs are telling us the whole truth about the products.
“Now, an increase in petroleum products will mean an increase in transportation and food items, among others,” he said.
He assured the public that whether there will be an increase in the pump prices of petroleum products or not, there will still be public transports running, noting that commercial drivers will not stop their daily retain because they have engaged the transport owners including all relevant stakeholders in the country.