Foreign Exchange is a major driver for commodity price including Oil and Gas.

The exchange rate of the United States dollars to the country's currency Leone has effect in the oil industry putting pressure on the pump price. Over thirty million United State dollars are needed monthly by the three oil marketers in Sierra Leone-National Petroleum, Total SL, and LEONCO to buy products internationally.

Since they sell their products in Leones, they have to convert whatever amount of money to the US dollar to enable them to transact internationally. The intervention of the Executive Chairman of PRA Brima Baluwa Koroma, since he was appointed by the President, has enabled a working relationship between these marketers, the Ministry of Finance and the Bank of Sierra Leone to meet some of their forex demand. While such effort has been helpful and ongoing because of their acute demands, oil marketers sometimes go the extra mile to source forex and buy at off-market inevitably putting pressure on the USD/SLL rates since their petroleum products are acquired in US Dollars.

The recent artificial scarcity of fuel products in the country could not be unconnected to challenges oil marketers are facing as they continue to run the industry.
Since the industry is managed by a well-experienced and technocrat Executive Chairman, Baluwa Koroma, has had series of engagement with oil marketers, the Ministry of Finance, Ministry of Trade and Industry in order to put the situation under control. As the Chairman continues to create more dialogue platforms, what clearly comes out is that at present, oil marketers pay an average of Le9, 000/1USD as compared to Le8, 600/1USD for dollar to do foreign transactions. This continues to affect working capitals of oil marketing companies.

Disparity within the region.

While a litre in Sierra Leone is sold at Le7, 000.00, when one converts local currencies of regional countries, to the Leone, Guinea is Le9, 120.00. Liberia is Le9, 321.00 Ivory Coast is Le9, 244.20 and Ghana is Le9, 136.44. The same applies to diesel and kerosene products in the region. This disparity has adversely affected the working capital of oil marketing companies. The disparity of product prices between Sierra Leone, Guinea, and Liberia, has made the country's porous borders smuggling points for traders who buy from Sierra Leone and smuggle the products to those countries thereby causing scarcity in the country. Smuggling continues to deplete government revenue which is not in line with the New Directions revenue mobilization drive.

While internal charges such as freight charges per metric ton, import duty, storage cost per metric ton, port charges, freight levy per metric ton and many more remain the same for over five years, PLATTS which determines international price keeps fluctuating.

In January this year when there was a downward shift in PLATTS price, there was an immediate reduction of pump prices in the country which was lauded by many as a means of demonstrating accountability by the Chairman of PRA. As it is now, there has been a minimum movement of PLATTS price recently but that is yet to reflect locally as the foreign exchange rate erodes any gains. There is a school of thought that harmonizing the fuel price within the Region will benefit all parties one way or the other. It will protect the working capital of OMCs, ensure product security for the people of Sierra Leone and enhance stable and predictable Petroleum tax revenue for the Government.