-Gov’t Announced Reductions on Petroleum Products’ Prices But…
By Jerromie S. Walters
On Thursday, July 4, 2024, the Ministry of Commerce & Industry, in collaboration with the Management of the Liberia Petroleum Refining Company (LPRC), announced reductions in the prices of petroleum products by ten United States cents (US$0.10) for both gasoline and fuel.
However, a random survey by this paper after this disclosure showed that the prices of both gasoline are being sold at major filling stations in Monrovia for $LRD830, contrary to the revised retail pump prices which the government said reduced it to US$4.18 (LRD 810.00).
Liberia has offered concessionary offshore oil blocks for bidding and direct negotiation in recent years, but few companies have expressed serious interest despite the discovery of offshore oil in neighboring Cote d’Ivoire. The National Oil Company of Liberia (NOCAL) oversees petroleum exploration, development, and production, and the Liberia Petroleum Regulatory Authority (LPRA), manages regulation and policy. Liberian law restricts NOCAL from acting as a chief negotiator for the government and requires competitive bidding for all petroleum contracts.
For decades, the West African nation has struggled to have an abundance of gasoline and fuel and ensure that they are affordable on the Liberian market. On multiple occasions, and in different governments, Liberians have experienced a huge petroleum shortage. This, to a certain extent, has made consumers, including drivers sleep or wake up as early as 5:00 AM to visit the nearest filling station.
Including several other factors, this undue struggle with affordable and insufficient petroleum products has been backed by the fact that Liberia does not have a functioning refinery. All petroleum products are imported from abroad. The Liberia Petroleum Refining Company (LPRC) is a state-owned enterprise responsible for issuing petroleum importation licenses and storing petroleum products imported into the country by private businesses.
However, the LPRC owns storage tanks at its Product Storage Terminal (PST) near the Freeport of Monrovia where it stores imported petroleum products on behalf of local importers who sell or distribute petroleum on a wholesale basis. A few Liberian-owned petroleum companies, including Srimex Oil & Gas, Conex Group, and Aminata & Sons, who are also importers and/or distributors, have their own storage facilities located in the compound of the LPRC, a petroleum product regulatory arm of the government.
The reduction
On Thursday, the Ministry of Commerce & Industry, and the Management of the Liberia Petroleum Refining Company (LPRC), announced that Gasoline (PMS) prices have decreased by ten United States cents (US$0.10) per gallon, while fuel oil (AGO) prices have also dropped by ten United States cents (US$0.10) per gallon.
According to a price circular jointly signed by the Minister of Commerce & Industry and the Managing Director of the LPRC, the new wholesale prices are set at US$3.90 per gallon for gasoline and US$4.43 per gallon for diesel. The revised retail pump prices are US$4.18 (LRD 810.00) for gasoline and US$4.71 (LRD 910.00) for diesel. These price adjustments reflect a uniform reduction of ten United States cents (US$0.10) per gallon for both gasoline and diesel fuel. However, this has not reflected on the market as pundits described it as a political reduction.
Meanwhile, the Minister of Commerce & Industry MoCI and LPRC say the Inspectorate Team will be actively monitoring compliance with these new prices to prevent any arbitrary increases in the pump prices of gasoline and diesel on the local market.
Gas wahala
In January 2020, petroleum products, primarily gasoline, were scarce for almost a week in Liberia. This was said to have been cause because the Freeport had not been dredged since 2016. In March 2024, President Boakai issued an Executive Order to reduce the cost of petroleum products by 20 cents to alleviate the cost of living. However, petroleum dealers claimed that the price imposed by the Ministry of Commerce hurt their businesses and might have hampered their ability to import more products into the country.
During the hearing of the 2024 National Budget at the Legislature, Gbarpolu County Senator Amara Konneh opined that President Boakai’s Executive Order #128, suspending surcharges on petroleum pricing, provided a windfall for importers while creating a deficit in the National Budget.
His words, “Given the sensitivity of the petroleum sector to exogenous situations beyond our control, permanent relief to citizens can only be achieved if the lower prices can also incentivize consumer spending to stimulate economic activity, thereby increasing tax revenue from other sources, partially offsetting the loss in surcharges on petroleum. This waived amount doesn’t benefit the pump price; it rather creates a windfall for the petroleum dealers. While we expect EO #128 to stimulate economic activity if enforced, the short to medium-term consequences it creates for the budget are serious and require immediate action.”
