Local fuel prices could become more vulnerable to external shocks following a decision by the National Petroleum Authority (NPA) to fully restore the Unified Petroleum Price Fund (UPPF) margin on petroleum products, says experts.
Under normal circumstances, the distance fuel travels to the pump from the storage should determine the cost per litre consumers purchase it. This means fuel prices will vary across the country due to the distance of travel from the storage. But the UPPF simply ensures that fuel prices for all Oil Marketing Companies (OMCs) are the same, irrespective of whichever part of the country one is buying fuel from. The UPPF takes that cost element away for the fuel to be sold as near as possible the actual cost of distribution.
Oil marketing companies reacted quickly to the regulator’s decision, adjusting prices upward by 9 pesewas on July 1st when the new margins took effect. The NPA had reviewed the margins downward last April.
This, experts – including Benjamin Boakye, Executive Director of Africa Centre for Energy Security and Nana Amoasi II, Executive Director of Institute for Energy Security – are of the view that restoring the UPPF in full at the height of the current economic hardship and rising international crude prices is ill-timed, as it has the potential to expose local consumers to more shocks.
While admitting that government could no longer afford to subsidise fuel, Nana Amoasi II said the timing of the decision exposes the Ghanaian fuel consumer to international and foreign exchange shocks.
“With the country’s debt to GDP being about 80 percent, government’s main concern will be to shore up revenue while cutting expenditures, particularly that which compel government to borrow to finance same,” the energy expert and traditional leader added.
Per the NPA’s directive, the reviewed UPPF margin which was 20 pesewas on petrol and diesel will now be 29 pesewas each. That of kerosene and LPG will now increase from 21 pesewas and 18 pesewas to 30 pesewas and 27 pesewas respectively.
“It’s not right,” says Mr. Boakye, adding that consumers were already asking for a reduction, thereby, making the decision insensitive. It will only increase the hardship on Ghanaians, as price at the pump is going up because of the announcement,” he lamented.
Fuel prices, since January this year, have shot up sharply by close to 40 percent, mainly due to the rising international crude oil prices and depreciation of the cedi.
For instance, a litre of petrol which sold at GH¢6.70 in January now sells at GH¢11.40.
With investors continuing to worry over tight global crude supply and lower demand as recession risks linger, it is expected that prices could rise further in the coming weeks and months, according to industry watchers.
Mastercard, a leading global payment technology company, recently concluded the second edition of the Fraud and Cyber Resilience Forum event in Accra.
This year's event...
By Prosper KAY
Bolt, the leading on-demand mobility company in Africa, has unveiled its latest safety feature, rider verification, to enhance driver safety in Ghana....
B&FT’s The Money Summit 2024 served as a platform for open dialogue, knowledge-sharing and collective strategising; paving the way for a comprehensive approach to addressing...
The Balenciaga scandal of 2022 sent shockwaves through the global fashion industry, exposing a dark underbelly of ethical lapses within one of the most...
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.