The Chamber of Bulk Oil Distributors (CBOD) insists that the recent fluctuations in fuel prices and subsequent adjustments at pumps are primarily driven by global market prices of petrol and diesel, as well as foreign exchange (FX) rates.
Contrary to certain claims suggesting that its members are exploiting the public, CBOD maintains that these factors, along with other domestic components, play a crucial role in determining fuel prices on the local market.
The Chamber’s Chief Executive, Dr. Patrick Kweku Ofori, for instance posited that from January to June 2022 international petrol prices rose by about 105 percent, while ex-pump prices rose by 64 percent due to the cedi’s value against the US dollar at the time – which stood at around GH¢8.
Similarly, from June to November 2022, although international prices fell by 34 percent, ex-pump prices increased by 67 percent. This rise was attributed to sharp depreciation of the cedi by over 68 percent, with one US dollar exchanging for GH¢15.
“Comparing the international prices of petrol in January 2022 and April 2023, ex-pump prices should have been about GH¢6.71 per litre. But it was 80 percent higher due to the 93 percent depreciation of the cedi (GH¢13/US$),” he stated.
Again, when the international price of diesel peaked in June 2022, the diesel ex-pump price was approximately GH₵10.8 per litre.
“International prices of diesel were almost the same in November 2022, but ex-pump prices jumpex by 70 percent to about GH₵22.7 per litre due to the cedi’s sharp depreciation by about 83 percent (GH₵15/US$) for the period under review.
“From January 2022 to April 2023, the international price of diesel increased by only 12 percent within the period but pump prices are still about 85.4 percent higher. Because, comparing the cedi within both periods, the cedi depreciated by 92.6 percent,” he said.
Dr. Ofori was speaking at a meeting with the media and Civil Society Organisations (CSOs) on developments within the downstream petroleum sector, and further clarified that the impact of changes in the FX rate on pump prices is more significant than the impact of international price changes.
On the gold-for-oil (G4O) policy – which has so far led to the delivery of an estimated 455,000 metric tonnes of fuel into the country – Dr. Ofori stated that it has not had any significant impact on the prices of petroleum products.
“The current reduction in the pump prices is a result of the fall in global prices since June 2022 and recent firming-up of the cedi. Gold for oil has no significance in the recent decline of fuel prices,” he said.
However, he added that “The best way to have lower pump prices is to ensure a stable and lower FX rate”.
CBOD’s position on market developments responds to growing concerns that its members exploit the public by manipulating fuel prices.
In response to a question from a participant during the engagement, he stated that the number of BDCs that initially participated in the G4O policy has now declined due to several factors.
“Currently, most of the dominant BDCs that partook in the first cargo – and were already trading on BOST – have rescinded their business interest because they consider it’s a bit cheaper to land the products on their own and also control other aspects which come in their operational activities. Because they could not carefully plan to meet demands of the members – the OMCs – that were off-taking from them.”
Furthermore, Dr. Ofori mentioned that notifications from key off-takers such as Total and Shell to refrain from participating in G4O led the BDCs to explore alternative countries of origin for their supplies.
Additionally, the demands of mines and others like power-generators compelled some of the BDCs to look elsewhere – on the grounds of economies of scale – rather than off-taking from BOST, he stated.
On the back of these developments, analysts are amplifying calls for a review of the policy.
Speaking to the B&FT, Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye aligned with the position of the CBOD on the factors influencing fuel prices, while also stating that the G4O policy has not yielded the desired outcomes as initially anticipated.
Although he praised the government’s decision to take action to address the issue, he admitted that the government appears to be pursuing a strategy different from what was originally communicated through the G4O policy.