Fuel prices to go up by 3 percent—COPEC forecasts

The Chamber of Petroleum Consumers Ghana (COPEC) is forecasting a 3 percent increase in fuel prices at the pumps for the first week of January 2022.

According to COPEC, the increase will lead to a 20 pesewas surge in the prices of petrol and diesel in the country.

A statement from the chamber said “On the National Petroleum Authority’s (NPA) website we have realized that from the benchmark prices NPA is using to project the prices for the first window of January, local ex pump prices will increase by 3 per cent. In nominal terms, we are expecting prices to surge by 20 pesewas per litre across the board.” Head of Research at COPEC, Benjamin Nsiah stated.

He however explained that “some OMCs may not utilize all their margins and if they don’t we are expecting maybe a 15 pesewas increase at the pump beginning 1-16th January 2022.”

Below is the full statement

EX-PUMP PRICES OF FUEL TO SURGE IN THE 1^ST WINDOW OF JANAURY (1^ST TO 16^th JANUARY, 2022)

Brent crude plunged by 10.7% to $73.45/barrel on the 26^th November, 2021 and the OPEC Reference Basket (OPB) plunged by 6.9% to $76.09/barrel on the same date. The OPB further tumbled to $70.07/barrel on 2^nd December, 2021. The plummeting crude oil prices was due to the new Omicron Variant new COVID-19 Omicron (B.1.1.529) variant which restricted mobility in some countries, and the expectation of gradual increment of oil production by Organisation of Petroleum Exporting Countries (OPEC) +.

However, Brent crude futures settled up $1.56, or 2.1%, at $76.85 a barrel, the highest close since Nov. 26, and a gain of 4.5% on the week as at 23^rd December, 2021. Additionally the U.S. West Texas Intermediate (WTI) crude futures ended up $1.03, or 1.4%, at $73.79 a barrel, to rise 4.1% on the week as at 23^rd December, 2021. The surge in crude oil prices is due to Libyan supply disruptions cutting supply of about 300,000 b/d and the lower anxiety towards the new Omicron variant because of the perception that, the variant is containable than previously feared.

In Ghana, the National Petroleum Authority (NPA) indicated that the benchmark price for petrol/MT for setting ex-pump price of petrol in the 1^st Window of January, 2022 is $707.95/MT. Again, the Benchmark price for diesel/MT for setting ex-pump price in the same widow is $641.38/MT. The NPA set the Ghana Cedi at Ghc6.4040 against a dollar.

Findings 

Using the conversion factor of 1324.4 for petrol from a metric tonne to litres, 1183.43 for diesel from a metric tonne to litres and a maximum total marketer’s margin and dealer’s margin of Ghc0.75 based on the flexibility of OMC margins, as well as a forward rate of Ghc6.4040 to a dollar, the ex-pump prices for petrol is expected to surge by 3.7% and diesel is expected to surge by 2.5%. Averagely ex-pump prices are expected to surge by 3.1% in the 1^st Window of January, 2022 from 1^st to 16^th January.

Table 1 presents the ex-pump price outlook for petrol in the 1^st window of January, 2022.

Source: NPA, 2022

Table 1 indicates that ex-pump prices of petrol (Gasoline) have surged by 3.7% from the last window in 2021. In nominal terms, ex-pump prices of petrol could increase by 24 pesewas if Bulk Distribution Companies (BDCs) and Oil Marketing Companies (OMCs) will charge all their supplier’s premium and marketers’ (Dealers’ inclusive) margins respectively.

Table 2 presents the ex-pump price outlook for diesel in the 1^st window of January, 2022.

Source: NPA, 2022

Table 2 shows that ex-pump prices of diesel (Gasoil) have surged by 2.5% from the last window in 2021. In nominal terms, ex-pump prices of diesel could increase by 17 pesewas if Bulk Distribution Companies (BDCs) and Oil Marketing Companies (OMCs) will charge all their supplier’s premium and marketers’ (Dealers’ inclusive) margins respectively. 

Conclusion 

The ex-pump prices of petrol and diesel are expected to surge by 3.7% and 2.5% respectively. In nominal terms, ex-pump prices of petrol and diesel are expected to increase by 24 pesewas and 17 pesewas respectively. The average surge for both products in nominal terms is 20 pesewas representing 3.1%. Some OMCs could increase their prices less than the 20 pesewas increase due to competition.

Note: If the government suspends the zeroing of the PSRL on diesel, petrol and LPG, then ex-pump prices could surge by at least 34 pesewas.  

Research and Training Unit 

Chamber of Petroleum Consumers (COPEC) 

SSNIT Emporium, Airport City 

Accra