Sierra Leone Telegraph: 2 July 2019:
Yesterday’s decision by fuel companies in Sierra Leone to increase the pump price of petrol by more than 21%, has sparked fears of further rise in inflation which currently stands at about 17%.
The price of petrol has gone up from Seven Thousand Leones (Le7,000) to Eight and Half Thousand Leones (Le8,500).
Speculation about fuel price rises have been rife over the last few weeks, with the country’s largest retailer accusing the government of owing the company millions of dollars in unpaid fuel bills.
However, yesterday’s announcement comes as cost of oil on the global market shoots up, due to rising tension in the Middle East, amid fears of a war between the US and Iran.
But the genesis of Sierra Leone’s continuous fuel debacle can be traced to the country’s weak foreign exchange and low economic growth.
In the last three years, the value of the Leone has suffered a 30% fall, due to a collapse in mining export revenue.
Sierra Leone still relies heavily on foreign aid and loans from the IMF, which comes with tough structural adjustment conditionalities, including the removal of government subsidy on fuel.
Although the government is being criticised for increasing borrowing, but it seems the government has very little choice in the short-term.
Assuming that private sector investments in key economic sectors such as fishing, farming, tourism, timber production, light manufacturing, and agro-processing, can begin to stimulate economic growth and create employment opportunities in the next two years, then the Bio-led government should have more money to spend on infrastructure development, education, health, and improved access to clean water, without further public sector borrowing and reliance on foreign aid.
But until then, the government is stuck between a rock and a hard place. The temptation to borrow more from the IMF and other sources will in the next two years be difficult to ignore.
In the meantime, inflation remains stubbornly high. But as local journalist – Sarah Kallay reports, yesterday’s increase is less likely to see a rise in cost of transportation in the country.
This is Sarah’s report:
Prior to the modification of the fuel pump prices, the Ministry of Transport and Aviation in consonance with the Ministry of Trade and Industry, and commercial transport owners, held a meeting on Thursday 25th June 2019, to discuss the expected increase in fuel prices and its resulting impact on point to point fares for motorbikes, tricycles (Keke), cars (taxis) and vans (Poda-Poda). The meeting also involved all district heads.
Speaking at the meeting, the Minister of Trade and Industry – Edward Hinga Sandy, explained that due to extenuating circumstances in the global oil market, caused by political uncertainty in the middle east, there has been significant pressure on demand.
This pressure has now manifested itself globally by a slight but significant increase in oil prices, and Sierra Leone is susceptible to its effect.
However, the Minister assured that the increase will not exceed a thousand five hundred Leones (Le 1,500) on any of the oil commodities. Minster Sandy then called for the review of the fuel prices using the existing matrix as price determinant for new cost of oil commodities.
The Minister of Transport and Aviation Kabineh Kallon cautioned against exorbitant price hike in drivers’ possible nefarious efforts to extort travellers.
He also warned against oil marketers collaborating with certain individuals to create false scarcity of fuel in the country, as this has the propensity to disrupt the flow of trading and normal daily routine of citizens.
The President of the Motor drivers’ Union Alpha Bah, President of the Indigenous Transport Owners Association – Alhaji Abu B. Fofanah, President of the Bike Riders Union – Umaru Talie Bah, and President of the Sierra Leone Commercial Tricycle – Union Bornoh Samba Kamara, all concurred that prices of point to point transport fare will not alter much.
It should be noted that even with this hike in fuel pump prices, the cost of fuel in Sierra Leone remains the lowest, compared to other countries in the sub-region, such as Guinea and Liberia.