‘Fuel Pricing;’ and the International Conspiracy to Muzzle African Economies
Sierra Leone, like many other African countries – with the exception of a handful such as Nigeria and Ghana- is at a loss to explain to its people the reasons why fuel price fluctuate every now and then, tipping the scale in favor of the oil producing and exporting countries.
Ghana and Nigeria are oil producing countries, yet their pump price is higher than Sierra Leone’s, which is the lowest in the sub-region, according to the Executive Chairman of the Petroleum Regulatory Agency, Dr Brima M. Baluwa Koroma.
However, no matter how much Dr Koroma has painstakingly explained the pricing dynamics for consumption by the general public, the bulk of the population, which is illiterate, would never be satisfied. They are concerned about the rippling effect on the cost of transportation and the prices of food items that are sure to rise whenever there is increase in the price of fuel.
The Organization of Oil Exporting Countries (OPEC), may well be described as an international consortium of greedy ‘conspirators’ using fuel as a weapon against emerging African economies.
Sierra Leone is believed to have an impressive deposit of fossil fuel (crude oil) which, if extracted, refined and marketed, would bring great relief to the country’s drive to a stable rise in its annual GDP. But it would not be in the interest of the international players in the fuel game to see Africa becoming fuel self-sufficient as is the case with the US, Russia, Saudi Arabia, Kuwait et al. So, hiving off African countries by depriving them of the technology and infrastructure to produce and export fuel has become an ace up their sleeves to make or break African economies at will.
When the world was hit by the Corona virus in late 2019, the price of fuel plummeted to as low as US$ 30 per barrel. Sierra Leone was able to cut pump price by a quarter, which brought respite to the government’s subsidies to fuel sector, without which it would have been forced to resort to domestic borrowing from commercial banks. Following the drastic drop in demand for fuel around the world, and the corresponding dive in the price per barrel, the oil exporting countries quickly conspired and agreed to halt oil production, as it were, to maintain a minimum threshold to protect the world market price of fuel from falling too low.
Unfortunately, Sierra Leone has not been paying attention to the dynamics of the local market driven mainly by the fuel dealers who, as is the case with oil dealers around the world, maximizing profit at all cost is the norm. It is this artificial price fixing and scarcity led by the few local importers of fuel that the Petroleum Regulatory Agency (PRA) under this government has been called upon to address.
Dr Brima M. Baluwa Koroma of the PRA has impressively articulated the government’s strategy to intervene by building more storage facilities around the country, and at least another jetty with gantry to increase the nation’s capacity to store enough fuel that would cushion the effects of sudden hike in fuel price in the international market from time to time. Until such a time that this government delivers on those promises, Sierra Leone would always find itself in a lose-lose situation when OPEC decides to regulate fuel production and cost per barrel to the advantage of its members. So far, the PRA is doing a fine job in pre-empting any dubious manipulation by local fuel dealers, smugglers and black-marketers, by keeping close tabs on their activities and the international fuel index pricing system.
Be it as it may, the PRA should be cautioned of the adverse effects of over-regulation, which may have unforeseen adverse effects on the Government. The last thing any sane government will do is to trample on the private sector by the introduction of radical measures such as out doing importers and marketers of petroleum products.
Rather than severing the good relationship between private sector players and the Government by tending to paint importers and marketers in a bad light, the Regulator should formulate mutually beneficial strategies to realise set goals in the interest of the common good.
Finally for the purposes of accountability and transparency, it is mandatory for the PRA Chairman to disclose the cost of constructing the additional jetty and the tank farms.
By Julian Walker
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