Sierra Leone govt orders mining companies to import their own fuel to mitigate forex pressure

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FREETOWN, May 13 (Xinhua) -- Beginning June 1, mining companies and other commercial end-users of fuel in Sierra Leone will have to import their own fuel or buy it from oil marketing companies (OMCs) under a foreign currency-denominated contract, the Finance Ministry has said.

The policy directive is part of the government's approach to mitigating the ongoing crisis in the country's petroleum downstream sector, which has largely been attributed to the Russia-Ukraine conflict, Finance Minister Dennis Vandy was quoted as saying in a statement issued late Thursday.

The new policy is part of "strategic decisions" being taken following discussions with stakeholders in the sector, including petroleum importers, necessitated by the need to reduce pressure on the Central Bank of Sierra Leone from providing foreign currency to the oil marketing companies, the statement said.

According to the finance ministry, out of a total of 61,545,694 liters of diesel fuel uplifted by the OMCs between January and March, mining companies and other end-users uplifted 32,539,167, accounting for around 53 percent.

"This implies that while the government provides concessions to these agencies, they also enjoy non-pass-through costs as they are also heavily subsidized by the meager resources of foreign support by the Bank of Sierra Leone with the aim of cushioning the retail market," Vandy said.

"The situation could get serious with evidence that mining companies were stockpiling diesel fuel with limited supply to ordinary consumers," the finance minister added.

According to finance ministry data, the central bank provided an estimated 24 million U.S. dollars in foreign exchange support in the first quarter of this year for the importation of petroleum products.

The central bank is said to be considering an additional 35 million U.S. dollars to support the OMCs. Enditem

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