The Institute for Energy Security (IES), has called on government through the National Petroleum Authority (NPA), to bring pressure to bear on Oil Marketing Companies (OMCs), to reduce prices of fuel at the pumps to reflect the trend on the international market and the relative stability of the Cedi against the US Dollar.
Even though some OMCs including Goil have effected some reduction, some stakeholders believe a more significant reduction by all OMCs, is needed to ensure that Ghanaians benefit from the continuous drop in the price of Brent crude oil on the international market.
Speaking to Citi Business News on the need for a reduction in fuel prices, a Policy and Energy Analyst with IES, Raymond Nuworkpor, said the OMCs are currently being unfair to Ghanaians.
“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.”
OMCs reject calls for reduction in fuel cost to reflect global crude prices
The Association of Oil Marketing Companies has also urged restraint over the calls for a reduction in fuel prices.
According to the CEO of the Association, Kwaku Agyeman Duah, the reduction can only be felt across the board when the OMCs are able to recoup their investments.
“Hitherto, there was no comment about it, we were sweating under diesel, diesel price was so high that the price of diesel we bought sometime 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 we 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.
The factors that affect fuel pricing in Ghana include; the cedi’s stability, global oil prices as well as tax components and margins of OMCs that constitute the price build-up of a litre of fuel.
Global developments such as the Coronavirus outbreak in China, has led to a drop in demand for crude. This has also contributed to the drop in the price of the commodity as data from Bloomberg shows that as at Wednesday afternoon, February 26, 2020, a barrel of crude sold at 49 dollars, 51 cents.
Again, on the same Wednesday, the local currency had witnessed relative stability considering the fact that it recorded a year to date depreciation of 3%, per information from the inter-bank foreign exchange market.
The various tax components, about seven of them, also add up to the price. 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.