Sierra Leone announces reduction in petroleum prices

Sierra Leone announces reduction in petroleum prices

By Kemo Cham in Freetown

Sierra Leone on Monday announced a reduction in prices of various petroleum products. According to a joint statement by the relevant government departments and representatives of oil marketing companies, the biggest reduction is on petrol, which is now Le7000, down from Le8, 000 per liter (Local currency trades at Le8, 418.71 to a US$ as per Central Bank rates). Diesel was reduced from Le8, 000 to Le7, 500; Kerosene from Le8, 000 to Le7, 600; and fuel oil from Le7, 000 to Le6, 500.

The move, which has been met with mixed reactions by the public, will generally be received as a welcome one, given the role fuel plays in the West African country’s politics. The announcement comes amidst criticism by the government’s political opponents that it had failed to bring down the prices of fuel, despite a fall in prices of petroleum products at the international market.

Under pressure from the International Monetary Fund (IMF), Sierra Leone has experienced about three fuel price increments in the last three years, all of them met with stiff resistance. The latest increment was effected by the new government of President Julius Maada last July, just three months into office, following his landmark victory in the March 2018 general elections. Many observers believe that fuel played a major role in that election which saw Bio’sthen opposition Sierra Leone People’s Party (SLPP) defeat the incumbent All Peoples Congress (APC) of Ernest Bai Koroma. Mr Koroma wasn’t on the ballot, having served his two five years term from 2007 to 2018. His party was represented by his former Foreign Minister, Dr Samura Kamara.

Civil Society Organisations have always led the resistance against fuel price increment, arguing that it hurts the ordinary man through the ripple effects of increase in the cost of basic goods and services.The issue has also set the government against petroleum importers, as in last year when State House accused the country’s leading importer of petroleum products of exporting its products to neighboring countries in exploitation of price differences. But fuel price increment has always been necessitated by the government’s commitment to its agreement with the IMF.

Towards the 2018 elections, the international lender fell out with the Koroma administration over its failure to fully implements agreement contained in its Extended Credit Facility (ECF) reached earlier in June 2017. That agreement put at the disposal of the country US$224.2million. An initial disbursement of $54.3 million USD was made by the Fund.

The key points of the agreement, however, were that the government should implement key economic reforms, including elimination of numerous tax and duty exemptions.Disbursement of the second trench of the funding was to be made after the next review, which never came. The IMF withheld the remaining funding after accusing the then government of failing to meet its side of the agreement.

When he assumed office, resumption of negotiation with the Fund was at the top of President Bio’s priorities. And in anticipation of the deal subsequently reached in November, the government increased fuel prices, bringing to an end 10 years of state subsidy on petroleum products.

That decision, taken as the new president marked his first 100 days in office, led to the first public demonstration against his government’s policies.The protests coordinated by the Native Consortium for Research and Development (NCRD) provoked heavy response from the police and criticisms from rights groups.The NCRD has been the most vocal against fuel price increment in the country. It has always argued that such increment always have the
negative effect on the poor citizens.

But the government has always cited development at the international petroleum market in its decision to increase prices.Officials have further argued that subsidized fuel have occasioned smuggling of fuel into neighboring countries, especially Guinea, where prices are always higher.

Statistics from the Petroleum Unit in the Ministry of Trade show that between 2011 and 2016 government spent either through physical subsidy or tax waiver some Le 937 billion (roughly over US$130m) on fuel subsidy. The government said it had been subsidising fuel since 2007. Between then and 2012, the subsidy has been across the board. But from 2012 the government introduced the two-tier fuel pricing system which meant that subsidy on fuel bought by big businesses and companies was removed. Only those buying for cars and home use paid for the subsidised price.

The government says the move announced on Monday is a demonstration of its commitment to improving the lives of the ordinary Sierra Leone. Presidential Press Secretary, Yusuf Keketoma Sandi, broke the news through a facebook post, noting that it is a fulfilment of President Bio’s New Year message, in which he promised “a year of hope.”

“The myth that when prices increase they never reduce has once again been broken by President Bio. In nine months, President Bio has not only increased salary, reduced taxes but also he has reduced the prices of Petroleum Products,” said the Presidential spokesman

 

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