The Institute for Energy Security (IES), has called on the National Petroleum Authority (NPA), to push for further reduction in fuel prices with Oil Marketing Companies (OMCs).
This, they say will ensure prices of fuel in the country reflect the trend on the international market. Fuel prices will be in tandem with the recent appreciation of the Cedi against the US Dollar.
Last week, state oil marketing company, Goil Ghana, reduced their prices by some 0.2 per cent. However some stakeholders believe the reduction was not significant, considering the general reduction of oil prices in the global market.
This, therefore, forms the basis for the call for further reduction. To ensure that Ghanaians benefit from the continuous drop in the price of Brent crude oil on the international market.
In an interview with Accra based Citi FM on 1st March, a Policy and Energy Analyst with IES, Mr Raymond Nuworkpor, said the current prices of fuel in the country is exorbitant
“When prices are going up, they increase prices; but when prices start falling you find that the OMCs are reluctant to reduce the price at which they sell their fuel.
“We at IES are calling on the NPA to have a conversation with the OMCs to ensure they obey the fundamentals of a deregulated market structure which indicates when prices should rise or fall”, he said.
The Association of Oil Marketing Companies has called for restraint over calls for reduction in fuel prices in the country.
They say they when fuel prices went up in the past, they did not increase the prices as they had to subsidise the prices for consumers.
Therefore, Mr Kwaku Agyeman Duah, the CEO of the OMCs, says Ghanaian ought to bear with them now that the prices have been reduced, saying that have investments to recoup.
“Hitherto, there was no comment about it, we were sweating under diesel, diesel price was so high that the price of diesel we bought some time ago wasn’t the actual price”.
“We had to somehow subsidize it and we have not recovered. So, the rate at which the diesel price was going up that’s not what was actually increased”.
“That is why when we are coming down, you do not expect to have a proportionate for the price because that is where we also recover. The question you may ask is how long will this recovery last, and that depends on the market forces”, he explained.
Factors Affecting Fuel prices
The stability of the Cedi, global oil prices coupled with tax components and margins of OMCs constitute the price build-ups of a litre of fuel in Ghana.
In addition to this, certain global developments also contributes to the reduction of fuel price in the international market.
For instance, a global phenomenon such as the Coronavirus outbreak in China, has led to a drop in demand for crude.
Data from Bloomberg, Indicates that as at Wednesday afternoon, February 26, 2020, a barrel of crude sold at 49 dollars, 51 cents.
Again, the local currency continues to witness relative stability against the major trading currencies,
By the close of day on Wednesday, the Cedi recorded a year to date depreciation of 3%, per information from the inter-bank foreign exchange market.
Also, there are about seven tax components that also add up to influence the price of fuel in Ghana.
This includes the price stabilization levy which is triggered when prices drop on the global market.
Currently, this is pegged at 12 pesewas per litre of petrol and ten pesewas per litre of diesel.