May 4, 2011 / 12:53 PM / in 9 years

Sierra Leone cuts fuel subsidy, prices jump 30 pct

* Petrol prices rise to 5,000 leones ($1.16) per litre

* Gov’t says will help it repay debt under IMF programmes

* Move coincides with switch to metric system

By Simon Akam

FREETOWN, May 4 (Reuters) - Sierra Leone’s government has slashed petrol subsidies to help meet its debt obligations, leading to an overnight 30 percent spike at the pumps.

The move in the West African state comes amid rising street tensions across Africa over food and fuel inflation as surging world commodities prices hit. The World Bank fears a flurry of elections may add to tensions.

Sierra Leone Minister of Trade and Industry Richard Konteh said the move would cut the country’s annual fuel subsidy bill to $25 million from $50 million and help it repay debt.

“($50 million) is what government has been subsidising for the past three years plus. That is really not sustainable,” he said in an interview with Reuters.”

“It has been at huge cost to the government. We are already hugely in deficit in the budget. We are almost at our point of jeopardy in programmes with the IMF,” he added.

Nine years after the end of a civil war, Sierra Leone remains one of the world’s poorest countries. Its $500 million annual government budget is less than a 50th the size of Nigeria’s.

The country is scheduled to repay to the International Monetary Fund loans totalling roughly $120 million through 2025, including $5.3 million in 2011, according to the IMF Web site.

Prior to May 1, the Sierra Leonean government was paying a subsidy of around 5,000-7,000 leones per imperial gallon of gasoline to maintain a retail price of 17,500 leones.

The government has also been foregoing 80 percent of 3 billion leones in weekly excise revenue from fuel imports.

The new fiscal regime for petroleum products axes the direct subsidy and continues the excise holiday.

The country’s three oil marketing companies established a new price for petrol, diesel and kerosene of 5,000 leones per litre — the equivalent of 22,750 leones per gallon.

The May 1 subsidy cut coincides with a switch from imperial to metric units at the start of this month, leading to public confusion at filling stations.

“I don’t have a problem with the price change, I have a problem with the litre system and its being used as a disguise,” said 32-year-old Fabundah Ansu as he filled his car in Freetown.

Editing by Jane Baird

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