NilePet Hikes Fuel Prices in Juba by 300%
NilePet increase fuel prices from 6ssp ($0.33) to 21ssp ($1.17) per litre, up 300%
December 17, 2015 (SSB) — South Sudan’s state oil company, NilePet, has increased fuel prices by 300% and 250% for wholesale and deport rates respectively, effective from today—December 17th, 2015
Wholesale prices used to be 5ssp ($0.28) per litre while depot and retail rates were 6ssp ($0.33) each. Now, it is 20ssp ($1.11) for wholesale, 21ssp ($1.17) for depot and 22ssp ($1.22) per litre for retail.
NilePet took the decision after all petrol stations in Juba decided to shut down their services due to uncertainty over fuel prices in the aftermath of the floating of the South Sudanese pound by government, effectively devaluing the pound by 485% overnight.
Fuel tanks are said to be either stuck at the border town of Nimule or returning to Uganda due to uncertainty over the floating of the pound. Some reports said that the government has introduced new punishing fuel tax fees in an attempt to increase non-oil revenues for the government. This is said to have caught the fuel suppliers by surprise.
In response, the fuel suppliers, most of whom are Somali businessmen contracted by NilePet, are demanding that the fuel prices should be increased to 40ssp per litre in order to recoup their cost and make some profits.
The government has refused and instead issued out an order, via NilePet, instructing the fuel market to charge only 21ssp and 22ssp for depot and retail rates. It is not clear if the fuel suppliers will comply with the order given the apprehensions over the pound-dollar rate.
What is interesting about the fuel prices is the way the government, NilePet, seems to be setting an arbitrary prices. If indeed the pound is now floating freely, shouldn’t the fuel prices be left to the forces of demand and supply just like the pound?
Why does the gov’t have to set the fuel prices if the pound is freely floating? In a free market where demand and supply control the market, the daily rate of the pound, the prices of goods and services, as well as the fuel prices, should all be determined by the market, not the government.
Which bring Junubeen to the real question of the day: has government really suspended the fixed rate or not? It is not just the fuel prices that is causing uncertainty in Juba, even the dollar-pound rate: while the official rate was raised to 18.5ssp, the black market rate has now increased to around 25ssp per dollar.
Floating the pound—what the government calls rate harmonization or parity action—was taken purposely to get rid of the black market and those parasitic forex bureau in Juba. Yet we still have the black market, alive and well. Why?
There is a reason why the black market is not dying, and might never die. This is because a free floating pound would practically tantamount to the moneyed guys at the central bank consulting the hawkers in the black market, every morning, or hourly, to inquire about the pound-dollar rate.
That would be a considerable humiliation to the Zol Kabir at the Central Bank; thus, they are not willing to concede, SO FAR. Their best chance in determining, influencing, the daily rate would be to out-compete the hawkers by supplying sufficient dollars. Instead, they are fond of sending in armed police to harass the black market guys.
Funny enough, the same police are then bribed by hawkers and they would be the ones to politely direct, lead, you to where the hawkers are hiding/resting for you to exchange your pound/dollars. The police love it; the hawkers are amused; the public is who-give-the-fuck; the gov’t is clueless; and life goes on in Juba.
In a free market economy, there should be only one daily rate for the national currency, and this is determined by the forces of demand and supply, not the government.
There is great confusion and uncertainty in the country concerning the new policy of currency. The government owes the nation an urgent full explanation of what is going on here.
It is not just enough to summon finance minister and governor of the central bank to appear before parliament: they should also appear on SSTV and explain their mess to the nation.
Many sound-minded, concerned Junubeen see nothing but misery and trouble in the hasty floatation of the pound. An importing nation like South Sudan should have started with local production of basic goods and services and the promotion of agro-industrialization; however, with the level of insecurity and absence of economic infrastructure in our nation, it is a non-starter.
Bring peace and security, stabilize the country and institutionalize the rule of law, and the rest will follow, including the unpegging of the pound.
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