By: Foday Manneh
Less than 48 hours after the Oil Marketing Companies announced that they would cease operations by Monday, October 17, 2022, amidst the debts challenges facing them – blaming the government for the fuel price structure, letter of credit, importer and suppliers’ margins.
The government of The Gambia has, through the Ministry of Finance and Economic Affairs (MoFEA), responded to these claims of the OMCs and said Petroleum Pricing Committee has been in consultations with the OMCs before the release of the final price structure for October 2022.
“It is surprising that we notice their reaction only through a press release without prior consultation with the pricing committee.” The Ministry said in a press release.
The Ministry also dismissed the claims of the OMCs to incur losses, saying it has not been substantiated with any financial statements as proof of the losses. However, it was surprising how this was possible, given the subsidy extended to the sector.
“The Petroleum Pricing Committee wants to inform the public that the government continues to subsidize AGO (diesel) for D7.03 per liter on each liter sold to the public.”
“This continued subsidy is primarily to limit the pass-through effects of fuel prices in the transport cost of basic goods and services as a form to the social safety net for the vulnerable group of society.” The release stated.
For Letters of Credit, the Ministry says the inability of the banks to issue Letters of Credit is a business issue for the individual OMCs.
According to the government, the dealers’ margin raised by OMCs was increased to D5.05 per liter to address their concerns about the low margin, historically at D3.88 per liter.
The importer margin of US$50 per MT and US$40 per MT for PMS and AGO, respectively, and OMCs traders’ premium of US$90 per MT and US$110 per MT for PMS and AGO, respectively.
“These margins are normally revised periodically based on the market condition in consultations with OMCs.” The dispatch clarified.
However, through the MoFEA, the government assured the public that the supply of petroleum products would be available and remain resolute.