By Mahmoud Tim Kargbo.
The government of Sierra Leone slashed fuel levies to bring the pump price down with an expectation to make the commodity affordable and available for the general good. So why are customers in Sierra Leone still facing artificial scarcity and are paying record prices to fuel up?
Considering the huge amount of international hard currencies the government is giving fuel companies, the drastic tax cut done by the government of Sierra Leone and the huge amount of revenue the government is losing in these tax cuts which fail to reflect on the current pump price, right-minded nationals are still asking why the fuel companies aren’t facing new government inquiries to determine if high fuel prices are the result of anti-competitive practices—the kind of review that will put the government in a better position to properly ascertain the reason(s) why measures like fuel tax cuts and the provision of international hard currencies for fuel importers aren’t reflecting on the current pump price of fuel in Sierra Leone.
We all understand the government of Sierra Leone cannot control world oil prices, but it is responsible for over 50 per cent of the pump price in taxes. If the primary purpose of these levies was purely to make money for the government, it means the government must cut down on taxes even though it is losing a huge amount of money to fuel importers and dealers (Connex).
The government of Sierra Leone further went on to provide international hard currencies for fuel importers and dealers (Connex) in order to make the commodity affordable and available to consumers to alleviate the suffering of the majority.
With all this, the fuel pump price is already far too high and the marketers, in a specific case an importer and marketer (Connex) is a part of the cabal to force the government to sell fuel at 21,000 Leones per litre.
The question is if government taxes are increasing the pump price of fuel above 50% and the government has drastically cut down on these taxes, why are these fuel marketers creating the current artificial scarcity in order to really force the government to increase the pump price to 21,000 Leones per litre?
GOVERNMENT INTERVENTION IN THE INDUSTRY
Bank of Sierra Leone Foreign Exchange allocation from March to May 2022 – 47 million US dollars.
Petroleum Subsidies to keep pump prices below the market price:
2020 – 66.7 billion Leones
2021 – 248.9 billion Leones
2022 – 200.5 billion Leones
Aggregate – 516.18 billion Leones
– Oil Marketing Companies’ monthly foreign currency demand is USD 30 million. (Source: Government Strategic Communication Unit).
Sierra Leone, like other nations, is reeling from sticker shock as the price of fuel soar in the wake of the Russia-Western proxy war that’s currently going on in Ukraine. Over the weekend, the cost of a litre of petrol in Sierra Leone topped Le 25,000 (black market) for the first time in history. At the same time, the government of Sierra Leone continue to assist petrol importers with international hard currencies and tax cuts with a sense to make the commodity affordable and available in all parts of the country.
Are oil companies colluding to keep fuel prices high?
The artificial scarcity and the surge in the current pump price should prompt government action to ascertain whether the huge amount of international hard currencies government keep issuing to fuel companies is being wisely used for the intended purpose. This is the time the government of Sierra Leone needs to arm the country’s competition authorities to come down hard on fuel companies that are failing to pass on the benefits of the present fuel tax cuts plus the international hard currencies help to consumers.
Oil companies in Sierra Leone may claim, of course, that the tax break and the international hard currencies government keep on issuing to them are overtaken by the cost of transporting fuel to the country and within the country. Part of the government’s inquiry will involve;
a probe into whether on a specific purchase, fuel importers are using all the international hard currencies they’re getting from the government to purchase fuel;
If yes, what is the class of fuel we are using in Sierra Leone?
What is the international price per barrel?
Is the amount commensurate to the international hard currencies the government is issuing out to these fuel importers on a specific order?
Are the wholesale price and transport stages of the fuel sector to determine if cost escalations are indeed behind the spike in pump prices?
The government of Sierra Leone must promise stiff fines if any anti-competitive activity that led to the current artificial scarcity is discovered. And such inquiries shall result in strict punitive action. Fuel importers and marketers must be forced to pass on tax cut benefits to their customers. Sierra Leone competition watchdogs should investigate if fuel companies in Sierra Leone are colluding to keep prices artificially high in a sense to make the government generally look bad.