A new policy by the Government of Sierra Leone requires all mining Company and other large-scale commercial interest companies enjoying fuel concessions to directly import their own fuel or enter into a foreign currency denominated contract with any of the oil marketing Companies and payment made in foreign currency effective June 1, 2022.
This was contained in policy directive issued by the Ministry of Finance as part of Government’s effort in addressing the economic challenges the petroleum sector is facing due to the ongoing Russia and Ukraine conflict.
Russia, the release say, is the largest supply of oil to Sub-Saharan suppling about 55 percent of its total oil needs.
The MoF said because of this conflict and it resultant effect on the country oil supply, there is the need to take strategic decision regarding the importation of petroleum products and the provision of foreign exchange to the market.
The Ministry of Finance noted that in the first quarter of 2022, forex support by the Central Bank of Sierra Leone for importation of petroleum product amounted to US$24 million, adding that the Central Bank is also considering further request of over US$34 million. “Hoverer, despite the regular government support to the sector by providing to facilitate importation of fuel, it had been realized that mining companies and other major commercial users with concession are the largest beneficiaries,” Finance Ministry said in the statement.
“Further our records show that from January to March 2022 alone of the total uplift of diesel fuel 61,545,694 litres from Oil Marketing Companies (OMCs), mining companies and other commercial users uplife was 32, 339,167 (53 Percent).This implies that while government provides concessions to these agencies and they also non-pass-through cost, as they are also heavily subsidized by meagre resources of foreign support provided by the Bank of Sierra Leone with the aim the cushioning the retail market.”
The Ministry said that this situation is potentially getting serious as there are evidence that mining companies are stockpiling diesel, constraining supply to the ordinary citizenry and small businesses.
Sierra Leoneans had to deal with two fuel price increases in less than a month which has far reaching effect on the cost and standard of living.
By Kelvin Roberts