Food Crisis Worsened By Government’s Decision To Raise Fuel Prices By 43% And Port Service Charges By 25%

Substantial decrease in traffic observed on Wednesday on one of the main streets in Hargeysa following the government’s introduction of higher fuel prices

Hargeysa, Somaliland, April 26, 2008 (SL Times) – A decision by the government of Somaliland president Dahir Riyale to increase diesel fuel prices by 43% and levy 40-25% surcharges on imports has driven the country’s food crisis to a new extreme level whereby it is no longer possible for most people to afford buying food staples such as rice and pasta.

Rice prices which doubled since last year globally surged to a record high of $40 per 50kgs sack this week in Somaliland after the government endorsed a proposal by the oil supplier TOTAL to increase prices of diesel fuel by 43% and patrol by 20%.

The government’s introduction this week of 40-25% surcharges on port handling services has also contributed to the dramatic rise in food prices.

Diesel fuel prices climbed from $141 a barrel last week to $203, a record high.

Due to the sudden and relatively huge increase in fuel prices and port charges, transportation now costs more. Bus fares jumped Sl.Sh 500 to 1500 on Thursday and people will have to pay more for transporting goods or accessing services.

Water trucking to rural areas has already stopped as the drought-affected communities were no longer able to pay for the rising fuel costs.

Local humanitarian organizations have expressed concern over the impact of the food crisis on the population especially children.

The rise in food and fuel prices have sparked protests in both Buroa and Hargeysa.

President Riyale is coming under increased criticism from the public for introducing higher fuel prices at a time when the whole country has been hit by drought and threatened by food insecurity.

Members of the house of representatives have termed the government’s decision to increase fuel prices and port service fees as illegal.

“We urge the public not to pay the new port surcharges because the administration has no mandate to impose levies against goods or services without a prior consent of parliament” said the chairman of the Finance Committee of the lower house, Mohamed Muhamud Omer-Hashi.

Legislator Ali Marehan has also criticized president Riyale for operating a government without a budget for the fiscal year of 2008.

“The president refused to implement the 2007 budget which was passed by the house. He was supposed to submit a new bill on the 2008 budget by December 2007. Instead he has been spending taxpayer’s money without being authorized to do so by the competent body – the house of representatives – in the form of a budget,” said Ali Marehan.

Legislators have also attacked TOTAL which runs oil depots at Berbera port on behalf of the Somaliland government.

Although TOTAL operates the Berbera Fuel depots on the basis of an agreement signed with the Somaliland government on 2000 however the deal failed to gain ratification by the previous house of representatives.

TOTAL collects a surcharge of around $14.5 and $16 respectively for every barrel of diesel fuel and petrol imported into the country.

Although the house has repeatedly called on the president to include the revenue from the surcharges in the state budget, however the money continues to be received by Mr. Riyale himself.

Knowledgeable sources have estimated the monthly revenue generated by the surcharges levied against fuel imports at $300,000 - $400,000.

Meanwhile the government’s action has won the support of the country’s Chamber of Commerce.

In a statement issued on Tuesday, the chamber praised the government for adopting “prudent fiscal policies that sparred Somaliland the type of upheavals as currently witnessed by neighboring Somalia”.

The chamber blamed rapid rise in global prices for the current food crisis in Somaliland.

The chamber made no mention of president Riyale’s decision last year to award monopoly on the export of Somaliland livestock to a single Saudi tycoon called Al-Jabiri.

In accordance with an agreement signed with the government, Al-Jabiri buys the Berberawi brand sheep for $34 per head only. During Haj time the Berberawi sells for $150 a head. Currently it fetches an average of $80 in the Saudi Arabian market.

The deterioration in the purchasing power of nomads has further been compounded by Al-Jabiri’s monopoly on livestock exports.

Source: Somaliland Times