A joint Senate Committee has recommended that financing cost on petroleum pricing be reduced to 1% and Evaporation charges reduced to 0.25% by the Liberia Petroleum Refinery Company (LPRC) and the Ministry of Commerce. The recommendation was contained in a report by the Senate Joint Committee on Ways, Means, Finance & Budget, Judiciary, Human Rights, Claims & Petitions, Public Corporations, Commence, Trade and Industry, and Hydrocarbon, Energy and Environment. The recommendation was considered by Plenary due to a communication from Margibi County Senator, Emmanuel J. Nuquay.
The Margibi Senator highlighted the unfair and troubling nature of the Petroleum Pricing Formula and requested an investigation into the matter so as to properly restructure the Petroleum Pricing formula to benefit the country.
Senator Nuquay said importers of petroleum products were charging per gallon a financing cost for the importation of petroleum products as follows; $0.046 for PMS; $ 0.052 for AGO; $0.011 for JET A1 and $0.09 for HFO. Nuquay further asserted that these importers have been in the business for years and as such, they should bear their own financing cost and not the citizens.
He said these charges incorporated in the pricing structure are excessive and do not reflect current day reality and best practice in the sector and current petroleum pricing formula contains a bulk storage charge of $0.35 per gallon. “This charge was increased in May by $0.05, taking the storage charge to $0.35 per gallon of petroleum product and the bulk amount was initially charged by LPRC to cover all of its activities, including Regulatory./Administrative, Testing, Vessel Discharge, Jetty maintenance and Storage when it was the only entity storing petroleum products.
At current both LPRC and Private Storage Tank owners are charging the same amount. This situation is grossly unfair as private storage tank owners have benefited and are collecting regulatory and others charges for which they are not rendering services,” he said.
The Senate Joint Committee said the additional five cents added to storage charge in May be removed and added to the Road Fund, thereby increasing the road fund levy to US$0.35 per gallon; The Committee further said the amount $0.05 applied against an annual importation of Approximately 130,000,000 gallons will generate US$6,500,000.00; and this amount approximately US$6,500,000 or more be designated for annual road works in each of the 15 counties of Liberia;
“That the amount annually collected is evenly divided on each of the 15 counties and storage charge be set at US$0.05 per gallon; and that LPRC’s services be incorporated in the price formula as follows: Jetty Maintenance US$0.14, Testing and handling US$0.14, and Independent Inspectorate US$0.11 and LPRC be supported by Government to engage in the importation, storage and sales of petroleum products on the Liberian market,” The Committee noted.
The Joint Committee said during the public hearing, LPRC Managing Director, Amos Tweh said his management team inherited the petroleum pricing structure and made strives to reduce petroleum prices. According to the committee, Tweh requested that while the pricing structure could be further adjusted, the Joint Committee could invite and engage the importers.
Tweh indicated that evaporation charges in the petroleum formula are derived from landed cost of petroleum products and the amount charged for storage covers all of its activities, including regulatory, administrative, vessel discharge. Jetty maintenance, testing and storage. He confirmed that private storage tank owners are charging the same amount but not rendering same services as LPRC.
