US$30M Road Fund for 2017/2018 National Budget Blocked

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The roads to Zwedru, Grand Gedeh County and the southeast, are an economic hazard for half of the year, every year in Liberia, due to the rains.

Could impede access to financing needed to pave roads to Zwedru, Toe Town

The Ministries of Finance & Development Planning and Public Works have written the Speaker and members of the House of Representatives to intervene in the unblocking of the National Road Fund and allowing the Inter-Ministerial Steering Committee (IMSC) to function, use and collect US$30 million from petroleum importers to support the 2017/2018 National Budget.

In order to contribute to the support of the budget, the IMSC set a US$0.25 (Twenty-five U.S. cents) road user charge on every gallon of petroleum product brought into the country – and the cumulative sum from these charges is projected to be US$30 million for 2017. Conventionally, the IMSC authorized the Liberia Revenue Authority (LRA) to collect the fees on behalf of the fund.

Unfortunately, in an attempt to collect the charges from petroleum importers, Srimex Oil & Gas sought a stay on the action from the Supreme Court, arguing that the IMSC is acting in contravention of the law.

Finance Ministry

In a letter to the chief clerk of the House, Mildred Sayon, requesting the assistance of the House of Representatives, Acting Finance Minister Alvin. E. Attah said: “The Justice in Chambers granted the petitioner’s request, staying the action and ordering all parties to return to the status quo…”

Minister Attah further said: “In view of this, the Road Fund is stalled. We run the possibility of a budget shortfall if this situation persists. It affects our ability to receive the matching fund from the MCC Compact, which would impede on the World Bank’s ability to work with the Liberian government to secure private financing to pave the 215km road from Ganta to Zwedru as well as the 10km road from Zwedru to Toe town.”

As a way forward, the Acting Finance Minister argued that the levels and sources of the road user charges are subject to legislative approval because the Legislature passed the law establishing the National Road Fund on December 12, 2016; and among other things, the law authorized the IMSC to raise money for the fund through road user charges.

“It was our assumption that the negotiations and hearings of the budget process between the Ministry of Finance and Development Planning and the Joint Finance, Ways, and Means Committee of the Legislature in determining US$30 million as contribution from the Road Fund to the National Budget satisfied the requirement of the law regarding approval from the Legislature,” Minister Attah wrote.

“In view of the above, I am writing to request communication to the following effect: that the leadership recognizes the Ministry of Finance as the IMSC member which shall consult with the leadership of the Legislature. That the budget negotiation process will satisfy the condition of consultation with and approval from the National Legislature and that the Joint Ways, Means, and Finance Committee in setting and agreeing on projections from the Road Fund to the National Budget would convey the Legislature’s approval. This action would allow us to remove the stay order and make the National Road Fund functional and viable.”

Public Works

For his part, Public Works Minister Gyude Moore also wrote the House of Representatives, saying the IMSC has agreed that of the US$0.50 (Fifty U.S. cents) previously collected as storage fee by the Liberia Petroleum Refining Company (LPRC), US$0.25 was set aside as a “road user charge.”

Besides Srimex Oil & Gas, Aminata has also challenged the US$0.25 charge from every gallon to support the National Budget.

“I am therefore requesting a communication from you (Speaker J. Emmanuel Nuquay) acknowledging that there was a procedural lapse, that the IMSC should have formally sought approval for the US$0.25 levy and that nevertheless, this action was anticipated and accounted for in the budgeting process. Any future levy, increase or decrease in the existing levy will have to be formally approved before going into effect,” said Minister Moore.

“This would resolve the legal question around the fund and make it functional. It will also allow us to complete our negotiation with the World Bank for the private sector to invest up to US$200 million in our road sector and bring much-needed relief to our people. It will also allow the MCC to match our road fund up to US$15 million as part of the compact.”

House’s Leadership
On Tuesday, December 5, during the 72nd day sitting, the House’s Plenary mandated its leadership to receive the two communications from the Acting Minister of Finance and Development Planning and the Minister of Public Works, and act upon them appropriately and timely.

7 COMMENTS

  1. This should be a no-brainer for the gov. and the courts. From what is written, there seems to be a law that impose the “road user fee/tax” ($0.25 or $0.50).

    This amount ($0.25 or $0.50) is a liability to the taxpayer (the person who buys the gas) not the oil company. That is if a gallon of gas in $3.75, $3.50 goes to the business and the business is require to “hold on to” or keep the $0.25 for the government (“trust tax”).

    The big question is, “DID THE BISINESS COLLECT THE MONEY ($0.25 or $0.50)”. If SRIMEX oil and gas sold their product at government stipulated price, it will mean that they collected the fee/tax. They need to “REMIT” it, no question about that. If they did not collect it, they are still liable for the fee/tax because it was impose by law.

    • By operation of the law, importers of gasoline become withholding agents of government. What the fuss … Any refusal to pay the withheld money should lead to sanctions including debt actions, suspension of import licenses, etc. Next, time fame the policy towards importers with irrevocable guarantees to pay GOL. I think of an old saying “No sorry for Chinese.” Too much friendship in this government on the revenue side, such that no one is willing to support ESJ. She is not a Superwoman, therefore, ministers do the people’s work.

      • A.T; you are so RIGHT. Please allow me to add on. When Government imposes a TAX on a product, ie gasoline; businesses have an obligation to withhold said tax and whatever amount(s) should be given to the Government. No questions about it. Afterall, TAXES come from the consumers ie the public; not the businesses. They only serve as TAX collection agents. TAX MONEY doesn’t belong to any business. Turn the MONEY over to Government. Now!

    • The question here is why should such fees collected be part or supporting the national political budget that at most time are used for paying government administrators salaries ? The fees can not be used because there is shortfall in government budget . The Finance Ministry seems to be using the argument that the funds are needed for the 215km roads, but why must that fund be supporting the national budget and not put in a technical escrow than supporting an administrative salaries budget ?

  2. When it rains in Liberia, the roads get horrendous. I know that the issue of money is involved. Let’s not talk money right away. Let’s talk common sense!!!!!

    My only simple question is this: Where on earth is the Ministry of Public Works?

    The MPW (Ministry of Public Works) can use its caterpillars to plow dirt in affected areas of major thoroughfares. Yes, my Lord it can be done! But, 10 times out of ten when it rains and the roads get horrific, no one ever sees the MPW at work.

    I know mighty well that it costs money to pave roads. We are destitute. But I also know that if one of our pants gets dirty, we can find soap to wash our pants. Well, well, can the MPW find dirt in Liberia? For sure dirt will wash away after a torrential rainfall. But, it’ll hold for some time.The MPW is always (MIA)…missing in action. Sadly, it has been like that forever.

    In Chicago, “before it snows”, the city workers prepare themselves to do battle with the snow. Not “after it snows”. So that’s how it should be in Liberia. The MPW should place its equipment in the counties of Liberia “before it rains”. The MPW should know by now that when it rains or “after it rains” roads get messed up. So, the MPS should plan ahead of the rainy season. Amen!

  3. Looking at the photo, one can clearly see, that the roadway is not drained. Not at all! There is a solution: Elevate the roadway in certain arears and install DRAIN PIPES/TUBINGS. Please do! That should help a whole lot…

  4. How about this for a ‘revolutionary’ idea …

    Have LPRC fulfill its rightful mandate, and obligation, of providing (importing) ALL petroleum products necessary for lubricating the wheels of Liberia’s economic growth and do this in a manner that’s transparent and accountable via open (media monitored) quarterly bids by recognized major petroleum refiners, marketers, traders, etc. This would:

    a) reduce the current landed (CIF) cost of petroleum products by an estimated 20% resulting from savings in ‘dead freight’, profiteering and other irregular financial costs.

    b) eliminate the added, unreasonable and (now) unnecessary ‘throughout and storage cost’ charged by LPRC (see LPRC’s budget to see amount) which is passed on to individual consumers, businesses and industries.

    c) highlight LPRC’s ‘added value cost’ to the landed CIF cost – by eliminating the multilayered players and tariffs – and making LPRC’s management and BoD actions more transparent and accountable.

    d) enable GoL to facilitate and/or have LPRC open ‘service’ facilities/stations in locations where for-profit petroleum distribution companies would not find profitable BUT where GoL’s long term economic and or development plan requires ‘service’ facilities/stations.

    e) enable GoL to re-establish procedures and ‘standards’ governing the granting of local distribution permits and operations of petroleum trucking and and service stations, and …

    f) *from my mouth to the next administration’s ear* – hopefully enable GoL to re-establish the multi-ministerial and private sector Petroleum Products Pricing Commission with a view to revisiting the 1973 GoL/LPRC Products Pricing Formula aimed at ensuring that LPRC’s management operates within approved budget constraints or suffers the consequences.

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