Importers

Since 1969, the Liberian Government assumed control over all fuel importation, storage and distribution, and established the para-statal Liberian Petroleum Refinery Company (LPRC). Diesel, gasoline, aviation fuel and kerosene are all imported under an exclusive license held by LPRC, which in turn franchises West Oil as the sole importer. West Oil buys and owns the fuel; LPRC offloads it from vessels into tanks at its Monrovia Product Storage Terminal (PST) and operates the storage facility. West Oil then sells the fuel to the licensed distributors. Most fuel is imported from Ghana and Nigeria. Little, if any, fuel is imported overland. LPRC charges a levy of six U.S. cents per gallon on all imports for the offloading service. A government –imposed import tax amounts to 65 U.S. cents per gallon.

The Government has licensed six private sector distributors for diesel, gasoline and kerosene. One of these, Exxon Mobil, also holds the exclusive nationwide distribution license for aviation fuel. Imports are generally supplied through small coastal product tankers, offloading at LPRC’s offshore terminal. LPRC imposes a financial charge of 6 cents per gallon for providing fuel from the terminal via pipeline to storage tanks in its depot in the Monrovia Free Port area.

Apart from raising revenues, LPRC’s role is difficult to understand. Dynamics of the monopoly sustain the high prices and inflexibility. There is a need to introduce competition to increase market efficiency. One of the first policies adopted by the Chairman of National Transitional Government of Liberia (NTGL) was the abolishment of the monopolies on petroleum imports and opening up the market to at least three importers. West Oil’s exclusive license was to be terminated at the end of 2003.  Both the Minister for Lands, Mines and Energy and Minister of Finance have confirmed the Chairman’s decree. The elimination of LPRC’s middleman role will inevitably lead to lower fuel prices and much-needed private sector investment. However, it will take time for this to take effect given the difficulties of establishing an import business, the low level of business confidence, small client base and a powerful cartel.