Two months back, a number of newspapers published my article headlined, `Bring down the price of petrol.’ At that time the spot price for a barrel of crude in the international market was $56 (fifty-six US Dollars), down from an all time hike of $149 that the rapacious OPEC (Organisation of Petroleum Exporting Countries) had pushed it to an unparalleled rapidity in the history of petroleum marketing.
In Sierra Leone, the pump price at filling stations had been grudgingly adjusted downwards by the oil companies from Le16,500 to Le14,500. It took a good deal of dragging of feet, and much dissention, before the oil companies agreed to the current Le12,500 per gallon for petrol and diesel. That happened when the price of crude was $56 per barrel, a third of the height it was at four months earlier.
Sierra Leoneans at the time of the price peak were paying Le16,500 as the pump price at filling stations. This, ofcourse was a result of the government’s cushioning efforts, utilizing strategic funds and negotiating with the oil companies for leeway. With the prices of commodities unpredictable, a huge rise in fuel cost would have spelt disaster for the still, new Ernest Bai Koroma government.
The government’s cajoling act worked and even in the dizzying projections of gleeful oil predators, that crude would burst the ceilings and hit $200 (two hundred US Dollars) a barrel, we were still buying a gallon of fuel at Le16,500. Then fate struck!
With the global money market in a new crisis, banks, financial institutions, airlines et al nose-diving; the grey faced Bush government in Washington staring at the `R’ word (Recession), the resultant effects impacted on the rest of the world.
Normally solid economies like Britain, Germany and even France saw banks and financial institutions tumbling down. Even Iceland, once viewed as a model state, was seriously hit when practically all the banks collapsed. Japan inevitably also fell into recession while China inexorably lost its momentum that had made it a prime importer of crude oil.
As millions of people lost their once stable jobs and fore-closures of mortgaged property increased in the USA and Europe, the global appetite for oil simply fizzled out. China’s huge need for oil disappeared and the gargantuan projections of oil producing countries from Saudi Arabia to Venezuela dissipated into thin air.
Even Nigeria found she could no longer host the prestigious World Youth Championships as the estimated $150 million suddenly became unattainable. President Yar’ Adua did not hesitate as he told his people that Nigeria could no longer afford such jamborees.
Now back to Sierra Leone. The current price of crude is fluctuating at an average of $40 dollars a barrel. It had dipped below that somewhat, but for frantic moves by the OPEC cartel to prevent a further drop in prices following their December 17 meet in Oran, Algeria last year.
The decision then was for the cartel to cut production by 2.5 million barrels a day. That too has not stopped the decline as they had hoped. It only slowed the speed of the drop.
Now, non oil producing countries like Sierra Leone have a God-given chance to benefit from the lower oil prices. Even the United States quickly adjusted the pump price of gas (petrol) to a little above two dollars a gallon. As at last weekend, a gallon of petrol cost the US driver $2.37 cents which is roughly Le6,500.
Understandably, Sierra Leone is not in the same league. She presently has no oil refinery. She also has considerations of transportation, storage and all the paraphernalia of arguments thrown at the public by the Ministry of Trade and the oil companies. But the bottom line is that, by not bringing down the price of petrol, diesel and other petroleum products in line with the realities of the day, the oil companies in Sierra Leone are fleecing both the government and people of this country.
Since November when crude was $56 a barrel, the oil companies have imported into Sierra Leone two consignments of refined oil (petrol, diesel & kerosene). The second importation was for 350,000 metric tons of oil.
The vital, notable, point is that the oil companies bought those quantities that they brought into Sierra Leone at the much depressed price of $56 dollars a barrel which was a third of the price they purported to have bought fuel at in July, four months earlier. Consequently, this negated their initial argument that the old stock they had been supplying Sierra Leone was obtained at the overall hike of $159.
NO OLD STOCK
The crucial point is that there is no more “old stock” of fuel in Sierra Leone that was bought at the old hike prices.
That brings us back to the inescapable fact that by continuing to sell petrol to Sierra Leoneans at Le12,500 when the price actualities indicate that fuel should now cost a good deal less, the oil companies are holding the government and the people of this country to a ransom.
Government must act immediately and work out the modalities of bringing the pump price of fuel to at least Le10,000 a gallon. I am being as pragmatic as possible in arriving at this figure as against Le8,000 that many Sierra Leoneans are clamouring for. The government has a strategic fund that it strives to keep afloat, working out the parameters with the oil companies. Refining costs, transportation, storage, excise tax etc take their toll. A Le10,000 pump price per gallon therefore should do the trick.
With that figure, taxi fares can be adjusted downward to Le500 `pole to pole’ while poda-poda fares can also be worked out downwards.
And the government needs to take action without delay. With Parliamentarians leading the cry for more pay and with the government not having the money to handle those exigencies quickly, the next best move is to make the Leone more meaningful in purchasing power. That is, by bringing prices of fuel down for a start.
With the leone having a better purchasing value, the parent who currently spends Le1,400 daily on transport to school for a single child (Le7,000 for a five-day week) would be spending only Le5,000 at Le500 pole to pole per taxi for that child.
Grocers will no longer have a ploy-point for habitually upping their prices. Government would be in a better position to monitor prices of goods as the perennial excuse of high transport fares would have disappeared. Even users of standby generators would breathe sighs of relief as they would now be paying far less for fuel.
Government must talk the oil companies into a price reduction of petrol and diesel immediately. All projections are for the current prices to fluctuate until the year 2010 at an average of $43 a barrel in 2009 and $55 a barrel in 2010 (EIA short term Energy Outlook for February, 2009 which are in line with World Trade Index prices – WTI).
Transportation and energy in this country usually eat up half of a family’s budget. If that can be narrowed to at least half of what it is now by bringing down the price of fuel, that should bring some smiles to grim faces.
As for those exploitating taxi drivers who are daily ripping-off the people with their “two-way” gambits, I have a proposal that should knock them for six. But let’s bring the price of fuel down first!
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By Arika Awuta-Coker