MONROVIA: Multiple reports reaching The ‘Investigative’ INDEPENDENT indicate that since the Liberian Government, through the Ministry of Commerce and Industry (MCI) and the Liberia Petroleum Refining Company (LPRC), increased the pump price of petroleum products on the local market, the prices of other essential commodities have sharply skyrocketed.
Few days ago, the two governmental entities issued a circular increasing the prices of petroleum products, citing external factors.
Ironically, prior to the government’s latest price increment of gasoline, a gallon of gas at various pumps in Liberia was LD$ 499.6 (3.24 USD) as at February 28, 2022. Read Global Petrol Price Index: https://www.globalpetrolprices.com/Liberia/gasoline_prices/.
Despite the alarming hardship in the country, coupled with the severe impacts of COVID-19 pandemic, this paper gathered from informed sources that intense pressure has been mounted on the Weah-led government, allegedly by importers to increase the pump price of gasoline in Liberia. Subsequently, the pump price of gasoline has jumped to LD$ 875 (US$5.66).
This increment of 2.42 USD or LD$375.4, according to experts, amount to 74.6% increment on every gallon at any pump locally.
It is also expected that the latest price increment would be higher than US$5.66 per gallon at smaller petrol stations across the country and at the behest of ‘canned boys.’
However, several concerned Liberians are wondering while President Weah allowed the leaderships of the Ministry of Commerce and the LPRC to increase the price of petroleum products when he (President Weah) is doing everything to be reelected come 2023.
A young critic of the Weah-led administration, former student leader of the University of Liberia, Martin Kollie, added his voice to government’s action, saying “Sierra Leone increased from 10k Leones (US$0.86) to 12k Leones (US$1.03).
“This is an increment of just 2k (0.17 USD cents). So, how much did Sierra Leone actually increase by? Just 20% even though international oil price has increased by 62%. This is sound economic governance. Gas price averages 4.4 USD per gallon globally,” Kollie noted.
Kollie maintained that “whenever gas prices rise so high mainly due to any sudden increase in aggregate demand worldwide amid disruption in supply and/or low production which has been fundamentally fueled by Russia-Ukraine Crisis, it is obvious that such external macroeconomic shock will affect most African economies including Sierra Leone and Liberia, because they are mostly import-based and aid-dependent.”
The young Liberian economist pointed out that in this case with external factor, what “any responsible African government does in order to assuage or moderate such shock like Sierra Leone has done is to try hard to maintain price stability and price control through appropriate policy options/measures since the country is not a producing country.
One simple way is to cut down taxes on importers and suppliers (e.g. tax holiday) for now. Or, GOL can step in to pay for the extra cost that has been or will be incurred by importers as a result of both exogenous and endogenous factors,” Kollie further stated on his official Facebook page.
Furthermore, Kollie intoned that LPRC and Commerce Ministry have every power to set price ceiling. “The gas industry in Liberia is not deregulated. After all, LPRC is a public enterprise, “he said.
Kollie wonders as to why the government increased pump price. He maintains that the government should have provided some incentives instead of what he characterized as “exploiting our people.”
Kollie: “You cannot transfer this cost to our people especially when most of them are jobless. It will increase their suffering (e.g. household income and purchasing power will be affected). Imagine for moment, civil servants have not even taken pay for several months.”
Another young Liberia, Boakai Jaleba of the former ruling Unity Party, said in a serious democracy, the government fights to absorb the financials shocks when there’s crisis but in Liberia, “the government plays hands off and allows the poor people to bear the brunt of the financial pain.”
Mr. Jaleba contended in a social media write-up that “other governments struggle to strike an economic balance; keeping real wage constant among others. The economists call it “maintaining macroeconomic stability,” he added.
He lamented that for the Liberian government, “it is all about tax revenue and making it seem a shortfall is a curse when it isn’t.”
Currently, Liberia has the highest petroleum pump price in sub-region; Liberia US$5.66, Sierra Leone US$4.12, Guinea US$4.23, Ghana US$4.50 and Ivory Coast US$4.11.
Meanwhile, the Government of Liberia has emphasized that its recent decision to set a new price structure for petroleum products in the country was not arbitrary, but one motivated by external factors.
Speaking during a special press briefing on Tuesday, Information Minister Ledgerhood J. Rennie said the government acknowledges that the increment is “hard to bite down”, but it is necessary to ensure the constant availability of the products on the market and the stability of the price.
“We are hoping that in the next month or so, we can revisit the decision and there can be a decrease”, Minister Rennie said.
He explained that the government is aware that the cost of petroleum could have an adverse effect on the general price level, which is why it is planning to revisit the new price structure in the “soonest possible time”.
He frowned on profiteering and hoarding of the products by some unscrupulous people, warning that anyone caught in the acts will be dealt with by the full weight of the law.
The Information Minister said the relevant Government agencies are working to announce fixed fares for transportation to various locations within 48 hours in order to avoid hiking of the cost. He warned commercial drivers against overcharging passengers.
For his part the Deputy Managing Director of the Liberian Petroleum Refining Company, Adrian Hoff, said importers of petroleum products in the country operate under a Collateral Management Agreement (CMA) that allows them to order products in the country without initially paying cash to the major international suppliers. But he said, once in the country, in order for products to be lifted from the LPRC storage facility each day, and taken to the market, the Liberian importers will have to pay per consignment at the prevailing global rate – thus their clamor for an increment in price.
Mr. Hoff said the Weah Administration has made tough decisions in the past to avoid increasing the cost of petroleum products by cutting levies. “We have met with the President and his biggest concern has been ‘don’t increase the price’ “.
According to a press release from the Ministry of Information, Cultural Affairs and Tourism (MICAT), the new the pump price per gallon of gasoline is now $5.66, while diesel fuel is $6.00. The government announced earlier that the decision stems from the Russian-Ukrainian crisis, since Russia is a major global exporter of crude oil.
The government officials claimed that the prices of gasoline and diesel fuel in Liberia is lower than many countries in the sub-region. They urged Liberians to make some adjustments in order to conform to the current global reality, as the government continues discussions with importers so that the brunt of the problem isn’t felt by ordinary Liberians, a comment that several Liberians have rejected.
Last week, pandemonium broke out as local dealers sharply increased the price of the products ranging from LD$750 to LD$1500, amounting to US$5 and US10 respectively.
With this latest gasoline price increment, ordinary citizens including students are feeling the brunt as transportation fares have heightened, while prices of other basic commodities are equally skyrocketing on the local market daily as well.
For instance, poverty-stricken passengers are now paying LD$200-225 from Central Monrovia (Broad Street) to ELWA Junction in Paynesville on a commercial taxi, while passengers are currently paying LD$200-225 from New Georgia Estate to central town on a taxi.
The situation is being made compound complex by the acute lack of Liberian dollar denominators to ensure easy and smooth transaction of business in several parts of the country. Recently, the Weah regime printed and infused onto the Liberian market about 8 billion new Liberian dollar of only 100 dollar denominator.
The current lack of smaller Liberian dollar denominators such as L$10, L$20, L$50, among others has been causing conflict among buyers and sellers almost daily across the country.
Last year, the Central Bank of Liberia (CBL) requested approval from the Liberian Senate to print a new family of Liberian dollar banknotes totaling over 48 billion to replace existing banknotes in circulation in a period of three years( 2021, 2022, and 2024) respectively.
The CBL on November 26, 2021, announced the arrival of the first 4 billion new 100 Liberian dollar banknotes, commencing the introduction of the L$48.734 billion new family of Liberian dollar currency.
The CBL on February 2, 2022, announced the safe arrival of a second batch of new 100 Liberian Dollar Banknotes, totaling L$4 billion to commence the replacement of old Liberian dollar banknotes.