The prices of gasoline and fuel have once more been increased by the government just days after rejecting a plea from the Petroleum Importers Association of Liberia.
The government had earlier claimed that it was not going to make any further increases in the price of gasoline and jet fuel for the month of June but intended to make a slight reduction in the price of fuel.
This public commitment comes after the government had downplayed a warning from the importers that they risked possible bankruptcy if the current price of petroleum remained the same — a notice which the government rejected and said that instead of increasing prices, they were going to work with the group to ensure the availability of sufficient stock in the country to serve the market for the next couple of months.
"These changes are based"
But after two days of artificial shortage, created as part of the importers' warning, the government has now moved to increase the pump price of gasoline and fuel by 0. 3% and 0.4% respectively, which is slightly less than the March increase, which was at a whopping 26% for gasoline and 32% for fuel.
Announcing the increase, the Ministry of Commerce and Industry, and the Liberia Petroleum Refining Company, in a joint statement, said that as of the month of June and going forward, the wholesale price of gas per gallon is US$5.72 and while the pump price is set at US$5.90 (L$895). As for fuel, the wholesale price per gallon is US$6.72 while the pump price is US$ US$ 6.90 (L$1,050.).
This means that filling up a gasoline car that takes 10 gallons now costs nearly US$60; more than what was paid just about a week ago, at the price of US$57. For diesel vehicles, the price is even higher. Previously, the wholesale price of gas per gallon was US$5.48 while the pump price was set at US$5.66. As for fuel, the wholesale price per gallon is US$5.82, while the pump price is US$6.00.
But during the acute gas shortage this week, the product could only be found by street vendors. Gas stations freely sold diesel, but gasoline was "like gold dust", as one taxi driver described the scarcity. Street vendors, also known as "can-boys" because they sell the petrol products out of jerry cans, were selling gasoline for as high as US$10 (L$1,500) per gallon.
“[The government] has announced that eighty United States Cents have adjusted the prices of gasoline while the prices of fuel oil have been adjusted by ninety United States Cents respectively,” the joint statement, signed by the Minister of Commerce Mawine Diggs, and LPRC Managing Director, Marie Urey Coleman, disclosed.
“These changes are based on the international prevailing market rate and the exchange rate, which falls in line with the Government's commitment to making products available and affordable at all times,” they added. “The Ministry of Commerce Inspectorate Team will be closely monitoring the approved ceiling prices to avoid an arbitrary hike in the pump prices of gasoline and fuel oil on the local market.”
The newest increment is the second time in two months since the start of the Russia and Ukraine war that petroleum prices have been soaring for months and it would deliver rising costs of doing business, especially in the transport of commodities, forcing households to reprioritize their spending — food first — due to rising costs.
High gasoline and fuel prices will eventually land on the shoulders of Liberian consumers, many of whom live on US$1 or less per day, exacerbating some form of income and or food insecurity — fuelling inflation expectations.
The government action, which is being blamed on the Russian war on Ukraine, would cause moderate economic dislocation as Liberia’s primary energy source is petroleum, an increase in the past and has been one of the key drivers of inflation.
Liberia’s primary energy source is petroleum, with Russia being a major producer of the commodity. Additionally, a future increase in gas and diesel prices is inevitable if the Russia-Ukraine war continues.
That hike would hamper the plan to protect Liberia's economic growth rate projection of 5.2 percent from 2022 to 2025.
What did the importers say?
The importers, while calling for an increase in the prices of petrol products four days ago, said in a joint statement that due to the Russia-Ukraine crisis, prices for both fuel and gasoline have been marching higher for months and that the situation was beyond the control of the Liberian government and the importers, hence the need for the increase in order to address the issue.
“The current prices set by the government, therefore, puts us in losses which are not sustainable and could lead to bankruptcy of our companies,” the group statement added. “In addition, amidst the current scarcity of petroleum products on the world market, there is a limited amount of stocks in the country and we need to procure stocks in time to have products readily available on the Liberian market.”
Presently, there are more than seven registered importers who ensure that adequate petroleum products are on the Liberian market. They include West Oil; Total Liberia Ltd (now Conex Petroleum), Aminata & Sons, National Petroleum, Srimex Enterprise, Petro Trade, Lib-Afric, and Monrovia Oil Trading Corporation.