By Mabinty M. Kamara
Sierra Leone's Minister of Information and Communications says the current global situations exacerbated by the coronavirus pandemic and the war between Ukraine and Russia continue to pose challenges to the global oil market, resulting in a shortage in the supply of petroleum products across non-petroleum producing countries.
Mohamed Rahman Swaray told journalists and civil society activists in Freetown on Tuesday 28th June 2022 that the situation is not a problem for Sierra Leone alone but for the entire world, and that Sierra Leone like other countries is just being shocked by rising in the price of fuel products.
He spoke about the strides made by the government such as improving storage facilities, supporting importers with foreign exchange, and bringing on board the other key players such as All Petroleum Products Sierra Leone, Addax/ Petrol Leone. The Minister said their data indicates that the country has fuel that should last up to July.
Many countries including Sierra Leone have to deal with constant artificial scarcities mostly created by the oil dealers, resulting in week-long queues at gas stations across the country whilst the government continues to be pressured by the marketers to accept an increase in the price of petroleum products while the public looks up to the government to cushion the situation.
From May 2021 to May 2022, Sierra Leone recorded a 76 percent increase in the price of petroleum products from Le8, 500 and reaching a high of Le 15,000. From June 2021 to June 2022, there’s been a 112 percent increase from Le8, 500 to Le 18, and 000. However, the situation is not peculiar to Sierra Leone.
The Platts average according to a presentation by Ministry of Transport and Aviation official, Professor Adams Stevens, at the media/civil society engagement hosted by the Government of Sierra Leone, recorded a 91% increase from May 2020-to May 2022 while from June 2021 and 29th June 2022 saw a jump that reached 101 percent.
In Sri Lanka for instance, with inflation rising to 30%, the government has stopped servicing all foreign debts, put a halt on school activities and workers asked to work from home.
He said Russia used to produce 10.8 million barrels of fuel per day with a consumption rate of barely 3.6 million barrels per day with the rest going into the world market. This has been affected by the ongoing war.
The plan by the European Union to stop purchasing Russian oil by December will pile additional pressure on global supplies especially when the US has exhausted its petroleum reserves.
Speaking on the current drivers of fuel prices, Prof. Stevens noted the effects of COVID, during which both demand and supply were affected due to the many limitations and restrictions on travelling and other activities posed by the pandemic. He said supply was suppressed by the Organisation of Oil Producing Countries (OPEC), the Ukraine- Russia war, and EU sanctions on Russia, among others.
Speaking on the case of Sierra Leone, he said transporting fuel to Sierra Leone is very expensive due to the fact that there are not many economic activities ongoing in the country hence a shipload to Sierra Leone is likely to return empty, hence the doubling of flight tickets to Sierra Leone from China. He also noted that the country is classified as among the high-risk countries in the world like Somalia and others, making its insurance premium high but said that the government has started engagement for the country to be removed from that list. Foreign exchange rates and taxes and levies are all contributing factors to the situation.
However, he said despite the fact that the US is talking with some OPEC members to increase production, and the EU trying to get back to the negotiating table with Iran, nothing is certain.
Many believe the shortage is an artificial one created by oil marketing companies in order to increase prices. The weeklong queues in Sierra Leone have since disappeared after the Petroleum Regulatory Agency Wednesday this week announced an increase in the pump price of petroleum products from Le 18,000 to Le 22,000, making the seeming shortage even more suspicious.
Copyright © 2022 Politico Online (01/07/22)
