The Government has adjusted the pump prices of petrol and diesel following continued increases in global petroleum prices and disruptions in local supply after several Oil Marketing Companies reduced or stopped sales.
Under the new prices, petrol will sell at NLe40 per liter and diesel at NLe45 per liter.
The adjustment follows days of artificial scarcity, with several filling stations refusing to sell fuel and long queues appearing across Freetown and other parts of the country. The disruption came as Oil Marketing Companies pressed for pump prices to reflect the sharp rise in the cost of importing petroleum products.
The Government intervened to restore supply and prevent the situation from developing into a prolonged fuel shortage.
Global Prices Drive up Local Costs
Sierra Leone imports its petroleum products and is therefore directly exposed to movements in international oil prices and the exchange rate.
Global petroleum prices have risen sharply amid continuing international instability, including the ongoing conflict involving Iran and its impact on international energy markets. Countries around the world are facing higher fuel costs as a result.
For Sierra Leone, the full pass-through price under the petroleum pricing formula would have put petrol at NLe41.04 per litre and diesel at NLe46.76 per litre.
Consumers will not pay those full prices.
Government will continue to subsidies both products, bringing the pump prices down to NLe40 for petrol and NLe45 for diesel.
Us$8.3 Million in Subsidies in Three Months
Government has spent approximately US$8.3 million in the last three months alone to keep fuel prices below their full market levels and cushion consumers from the rapid increases in international prices.
But the scale and pace of these subsidies cannot continue indefinitely without putting significant pressure on public finances and taking resources away from other national priorities.
The new prices therefore balance three immediate priorities: keeping fuel available, cushioning consumers from the full international price increase, and keeping Government support at a sustainable level.
Waka Fine Fares Will Not Increase
Government is also taking specific measures to protect commuters.
Despite the increase in pump prices, Waka Fine public transport fares will remain unchanged.
Government will provide additional subsidy to cover the increased fuel cost for the Waka Fine service. This means passengers using the Government-supported public transport system will continue to pay the existing fares.
Government to Enter The Petroleum Market
The latest disruption has also reinforced the need for structural changes in Sierra Leone’s petroleum sector.
The new Minister of Finance has made clear that Government must move beyond responding to repeated price and supply shocks and take steps to strengthen the country’s control over its fuel security.
Government is therefore accelerating plans to become a more active participant in the petroleum sector, including fuel importation, storage and wholesale supply.
The objective is not to displace private Oil Marketing Companies, but to ensure that the country is not left entirely exposed to external shocks or disruptions in supply by private operators.
Greater Government participation will provide a strategic buffer, strengthen national storage and supply capacity, promote competition and give the country more options when international markets become volatile.
The immediate priority is to restore normal fuel supply and end the queues. The longer-term objective is a petroleum market that is more stable, competitive and resilient and in which Sierra Leone is better able to protect itself against both global shocks and locally imposed supply disruptions.