Stat CRUNCH:Statistics
Somalia's Fuel Prices Reach Record High
Rising Importation Costs and Piracy To Blame
By YUSUF HAGI 07/02/2011
Somalia’s fuel prices reached a record high average of $240 per barrel in June more than double the price of the previous month, industry leaders said. In May, the average price of fuel was $160 per barrel.

According to the officials, this has been attributed to the fact that oil importers are forced to hire foreign ships to import the product. The piracy menace along the Somalia’s coastline has also been cited as a hindrance to the smooth importation of the oil supplies.

“We always set our price in accordance with the world market, but we are forced to adjust our prices upwards to cover the high costs of importation,” said Mohamed Ahmed Said, the manager of Somali Oil Company, outside his petrol depot in the capital Mogadishu. It is expected that the prices will rise further due to a biting fuel shortage in the war-torn Horn of African economy that has been without a central government for 20 year. Over the last few years, many oil companies have kept off the Somalia waters due to increased cases of piracy attacks.

Much of the Somali oil is jointly sourced from the Gulf States by a group of oil dealers, who normally share to cost incurred.

Within the last one and a half months, the fuel price per barrel has increased by $80, Said explained.

Consumers are worried that the escalation of the fuel prices will hike the cost of living, as many people use generators to produce electricity for both domestic and business use.

“The high fuel cost has forced me to cut on electricity consumption,” said Ali Abdirahman Adan, a local resident and father of five.

Others say they have been forced to do away with electricity altogether. Omar Deek Ali, a local primary school teacher, says, “It is very difficult to pay $25 or more a month for electricity because initially I used to pay only $12 per month.”

He says the main reason why he installed electricity to his house was to enable his children do homework at night but now he can longer afford it. "Now, my children are studying their lessons in the mosque where light is available,” he says.

Meanwhile, the fuel crisis has resulted into increased price of food stuff. Currently, cost of 1kg of corn is $0.7, the price of 1kg of rice is $0.7, the price of 1kg of sugar is $0.84, and the price of 1kg of floor is $0.58, while a kilogram of pasta is trading at $0.9.

Somalia’s economy, which collapsed in 1991 following the overthrow of Mohamed Siad Barre, is now driven by the private sector.