“Sierra Leone currently has a two tier fuel pricing formula that subsidises the pump price for the public on the one hand and ensure multinational companies on the other pay the full price”, the Executive Chairman of the Petroleum Regulatory Agency Dan Mason said in an interview yesterday.
He complained that the whole discussion about reducing the pump price by some section of the public leaves out the commercial pricing formula and only stresses the retail pump price.
The retail pump price has remained constant at Le3,750 for the whole of 2015 to date because government is subsidising to keep the commercial pump price low for its citizens. The commercial pump price is the actual price without subsidy for a litre of petrol. The commercial pump prices flow as the price of crude oil increases or decreases, he said.
“The retail price is Le3,750 per litre but the commercial pump price has been galloping from Le3,860.86 in January 2015 to Le4,192.77 in December 2015. The highest point for the commercial pump price was July 2015 when the price rose to Le4,468.81. The commercial pump price affects multinational companies, foreign embassies and other business interests.”
He emphasized that it is unfair for the ordinary man and woman to buy fuel for his/her car, generator at the same price as mining companies. That is why government is spending so much as subsidy to keep the price low and constant.
“There is an updated commercial pricing formula every 2 weeks and this is circulated across government institutions. Copies are usually sent to the Ministry of Finance and Economic Development, Ministry of Trade and Industry, Customs, Sierra Leone Roads Authority etc.
“Subsidy in 2015 was Le.150bn and the highest petrol subsidy was paid in June; the sum of Le.18.34 billion was paid as subsidy during the period. With the drop in the price of crude oil in the World Market, the commercial pump price dropped on 16th January to Le3,971.13 and the subsidy as well dropped to Le.6.53bn.
“The much talked about subsidy is not money paid to any individual or institution, it is money worked in terms of tax. “Subsidy is not a transaction but quantifiable because it is revenue forgone by government,” Mr. Mason said.
There have been stories about people smuggling fuel to Liberia and Guinea which supports the claim that fuel is cheap in Sierra Leone compared to its neighbours.