What's In It For The Gambia?

It came to my attention by way of a public announcement on GRTS that the price of Petroleum products  (PMS, AGO & KERO) has been increased. Well this did not come as a suprise considering the recent upsurge of global petroleum prices both in the crude and refined markets. Petroleum is a strategic product of national interest as it's effects filter down on all sectors of the economy. Furthermore price stability which has a consequential effect on inflation is highly sensitive to the volatility of Petroleum pricing.

Having said the above, the government of the Gambia need to revisit the national Petroleum arrangement (procurement, storage and distribution mechanisms) to ease off the spikes that are common in the trading of petrol products globally.  First off, the current arrangement of the Mandinari Tank Farm is not in the best interest of the General public as the management of the tank farm/ storage facility has a vested interest in the importation of the product stored. This creates a messy relationship that puts EURO AFRICAN GROUP at an advantage relative to other importers. The parcel size of product imported directly affects the freight cost of product on board. Therefore the storage facility can opt to store a minimal quantity for competing importers thereby putting them at a disadvantage considering that the pump price is fixed. I therefore suggest that Euro African Group MUST BE delisted from importation since they dictate the terms of storage including throughput cost per liter stored. Government being a majority share holder by way of equity owned  in the storage by different public enterprises must accord the public enterprises to form the management of the storage company not the minority share holder controlled by Mr Bazzi.  With regards to the importation matrix, the platts plus premium  formula used MUST BE REASONABLE as all cost borne by the importer will be passed on to the consumer at the pump level. The premiums quoted for Platts FOB MED destined for the Gambia are not in line with premium quotations for similar destinations leaving Mediterranean refineries. The fat that was enjoyed by importers mainly European Africa Group over the years has been at the expense of the consumer and sluggish growth figures of our economy.

So what's the way forward? Let's institute a price mechanism that smoothen the price of Petroleum products over a forseable future (2 years). This allows planners to have visibility in economic projections and planning. This can be instituted by creating a formula that has an inbuilt buffer called FLUMARA (Fluctuating Market Rates). This assumes a fix pump prices and savings made on importation in  will be domiciled on a stabilisation fund that smoothen prices to avert inflationary pressures in the short term. When global prices hike up, the gains on the fumara will be used as a stabiliser so that the consumer will not feel the pinch of price volatility. This is the best alternative for price stability and prudent macroeconomic management of our energy sector which reverberates in all sectors of our economy. Finally, I will implore on the team at MOFEA to advocate for ECONOMIC NATIONALISM in the procurement of major government services. We DO NOT NEED the likes of Euro Africa to procure for us. They bring no value on the procurement process but rather leverage on guarantees provided by local oil marketing companies to raise their financing instruments. Enough of this economic plundering by brief case businessmen  with no ties or social interest to the Gambia.