Soak the dried chillies over night, then drain and place in a pestle and mortar. Pound to a paste then add the anchovies and pound to a paste. Follow this with the other chillies a handful at a time and pound to a paste as well.
Once you have made a coarse paste from the chillies add your oil to a heavy-bottomed pan and heat on high heat until almost smoking. Add the chilli paste carefully to the oil and mix inches Add the sugar then season.
You will need to cook for a long time until all the water from the chillies have evapourated off and the only liquid left is from the oil. By this point the chillies will have blackened significantly.
Spoon into an air-tight jar along with all the excess oil, seal allow to cool and store in the fridge.