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Sierra Leone Business: New fuel price will reduce revenue loss by Le235b –Finance Minister

The policy reform in the recently approved price tag for petroleum products is aimed at significantly reducing the projected loss in revenue by Le 235 billion during the second half of the year, according to Finance Minister Jacob Jusu Saffa.
The single and full-pass through pricing formula he says has the full potential for revenue from petroleum excise duties to now be realized in subsequent years. This system effectively scraps the two-tier system which saw one price for those buying from pumps at petrol stations, which is subsidized and a second price for commercial customers who buy bulk and in larger quantities, which is not subsidized.
This reform was made against the backdrop of avoiding the projected loss of revenue and other challenges of cross-border smuggling of fuel products as well as the difficulty of preventing commercial customers from buying fuel from the retail outlets.
Excise duty on petroleum products was revised downwards by Le139 billion to Le361 billion compared to the original target of Le500 billion. It has been projected that through direct and indirect fuel subsidy, if the pump price remains at Le6,000, revenue is projected to amount to Le500 billion by the end of the 2018.
However, by the end of May 2018, all revenues from the sale of petroleum products were said to have been eroded leading to payment of direct subsidies to Oil Marketing Companies in June 2018 by which period Government had lost Le180.3 billion.
The government owed direct subsidies to National Petroleum (NP), TOTAL and LEONE Oil for June amounting to Le5.2 billion, with Total petroleum revenue lost in the form of indirect subsidies amounted to Le175.1 billion during the first half of 2018.
As a result of the weak performance in the export sector in the midst of increasing demand for imports especially petroleum products, the exchange rate came under severe pressure in late June.
By Zainab Iyamide Joaque
Monday July 30, 2018.

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