By Abdulai Faineh Dumbuya
The Petroleum Regulatory Agency (PRA), World Bank Representatives, Oil Marketing Companies (OMCs), in collaboration with the ministries of finance, trade and industry, have discussed Sierra Leone’s fuel price formula review draft which has never been examined for decades, according to officials.
This initiative, while significant on its own, forms part of the government’s effort to accelerate open, fair and accountable review that seeks sustainable fuel price formula, as discussed at a stakeholders workshop on June 6, 2024.
During the event, Brima Baluwa Koroma, the Executive Chairman of PRA, said that the agency has been in search of a private consultant to lead a review of the price formula since 2020, saying that Sierra Leone’s fuel pricing structure does not fairly reflect at the pump and the affordability by consumers.
“The price structure has not been substantially reviewed by an independent third party for a very long time. It is over thirty years since the World Bank last reviewed it. In essence, we also want to implement a ‘Full Pass Through’ that is fair and transparent and this will be legislated in the new PRA Act,” he said.
He pointed out that the review will breakdown analysis of each individual element within the Sierra Leone import framework with a view to identifying best practices and recommending appropriate improvement; as well as mitigating the impact of fuel subsidies and power subsidies going forward.
Koroma said that the primary objective of the review framework is to address the supply chain challenges as well as take practical steps that will impact effective and efficient service delivery, whilst crystalizing that Sierra Leone will be using a pre-defined pricing structure that determines the fuel prices presented to consumers every month.
He said that the expectation is to promote development of a strong and competitive industry that operates safely and economically with harmonized government objectives. Going forward, he said they will have to consider the impact of the formula on each fuel dealer, public transport, and mini buses among others.
“By the way, the purpose of today’s workshop is not to increase pump prices, and I need to make that clarification generally known,” he said.
On her part, Fatmata Kargbo, the Deputy Minister of Trade and Industry, described the event as a landmark geared towards the inaugural review of the Sierra Leone pricing formula, saying that the time is appropriate to stage the workshop to ensure an efficient and transparent energy sector.
“Reviewing our fuel pricing formula is not merely an administrative exercise but a pivotal initiative that underscores our commitment to economic stability and social equity in Sierra Leone. The initiative is to ensure that pricing decisions are based on clear, consistent and publicly accessible data,” she said.
As a supervising ministry, she said they have been diligent in their efforts to establish a robust regulatory framework that will ensure fair competition and transparency within the petroleum sector, as well as building investor confidence for an enabling market and environment.
Established as Petroleum Unit in 2014 and formed by statutory instrument of 2016, Veronica Kadie Sesay, Chairperson Committee on Trade and Industry in Parliament, said that PRA has been instrumental in terms of revenue generation and service delivery, thereby urging petroleum industry to develop healthy competition among the operators.
She pointed out that while the government is creating a favourable environment for investors, the operators should also uphold their responsibilities to the public through efficient service delivery.
Senior Energy Economist of World Bank Elcin Akcura said that fuel price regulation is a complex issue especially for importing countries like Sierra Leone but, more than anything else, needs to review the price formula in the hope of building consumer interest as well as being compatible with the global practices.
“In the current global oil market, it is especially important to review and update the fuel price formula that best reflects global practice and that the World Bank draft fuel price formula will provide critical information for revising the formula,” she said.
Alongside the key players, Civil Society Organisations, representatives from the media, government departments and agencies also made in-depth contributions on the current petroleum pricing formula review.
Copyright © 2024 Politico (12/06/24)
