The Managing Director of the Liberia Petroleum Refining Company (LPRC) has issued a dire warning that a petroleum shortage looms and is imminent if the Government of Liberia fails to act in a timely fashion, to put brakes on the spiraling cost of petroleum products. According to Madame Urey Coleman Browne, current stocks are low and may not last beyond 3 weeks. And when that happens, it will have serious repercussions on the Liberian economy and people.
As things stand, it remains uncertain or unclear whether fuel stocks held in storage by the various importers are actually at an all-time low as the public is being led to believe. Whatever the case, the current situation does not appear to lend room for speculation; therefore it is only prudent that GoL conducts a physical inspection to ensure that importers are not hoarding in order to induce a price increase.
According to sources, importers are demanding a US$1.00 (one US dollar) price hike in order to avert loss, which they say is occasioned by the current Ukraine-Russia war. But whether such demand is indeed justifiable is the question on the minds of the public. According to a long-term resident and prominent foreign businessman, price fluctuations in the cost of essential commodities are exacerbated by the lack of a national consumer price index.
According to him, such an index will serve to provide guidance to Commerce officials on how to adjust prices downwards or upwards depending on prevailing world market prices on various commodities, especially those deemed as essential. Currently, the wholesale price of a gallon of gasoline stands at US$5.72 while the retail (pump) price stands at US$5.90.
Meanwhile, the wholesale price of a gallon of diesel (fuel) stands at US$6.72 while the retail (pump) price stands at US$6.90.
The problem is usually, especially during the recent crunch when most filling stations were turning away customers for the lack of gasoline/diesel, street vendors, referred as “Can Boys” were doing brisk business selling gasoline/diesel at very exorbitant prices.
That left the public questioning just how come such was possible in face of critical shortages of the product. Without question, such development served to deepen public impressions of hoarding by importers. But it must be pointed out that recently there have been price increases of petroleum products on the Liberian market. The last increase on 9th June was the second increase in two months.
Of course such increases have been attributed to the ongoing Russo-Ukraine war, the effects of which have triggered price increases worldwide.
As to whether this has translated into what importers have proposed — a new price hike — remains unclear. But what that imports for the general public is an increase in the prices of basic commodities including the cost of transportation and virtually everything else.
At the heart of the public discourse on current developments surrounding the petroleum crisis is the issue of the National Road Fund and the diversion of resources from the fund which, according to Finance Minister Tweah, was used to pay salaries of public sector employees.
There is a general perception that the current Russo- Ukraine war aside, the proposed price hike is highly skewed towards the interests of the importers in the main and few top officials.
According to sources, some importers in collusion with some local officials are clandestinely trucking fuel across the border into Guinea where it fetches a higher price. Thus, according to informed sources, the current crisis is driven in part by a global price rise on one hand and on the other, the greed of importers and the imposition of high taxes on imported commodities which includes petroleum products.
From what it appears, the situation, if left unchecked, could have a devastating impact on the economy, especially the tourism sector in general and the hospitality sector in particular.
For example, most hotels in the country, especially in Monrovia, Gbarnga, Ganta and other commercial zones, run on diesel powered generators and the lack of either diesel and or gasoline to meet their needs could lead to low occupancy rates which will ultimately have a contracting effect on the hospitality industry.
A hotelier commenting on the situation, revealed that his monthly fuel consumption needs amount to 9,000 gallons. But his most recent attempt to source diesel/fuel netted him a mere 900 gallons. According to him, should the situation persist unresolved, he will have to shut down his facilities.
So just what can be done, realistically speaking, to meaningfully address the situation for the better is the haunting question.
In such a situation, according to analysts, President Weah should consider several options — one of which is a temporary suspension of excise tax on petroleum products accompanied by a reduction in the pump price of gasoline and diesel currently standing at US$5.66 and US$6.00 respectively.
Another option which could prove helpful in the long term is the development of a consumer price index, something which the Ministry of Commerce is perfectly suited to do.
There are other tax regimes as well which need to be revisited as part of all-out efforts to place the economy on an even keel, according to analysts.
Of utmost importance at this moment, GoL needs to launch an investigation into reports of the illegal diversion trucking of petroleum products over the border into Guinea.
The recent Senate probe launched into LPRC operations is encouraged and should be far-reaching and overarching as well to get to the bottom of what appears to be a few individuals holding the nation hostage.