Players in the importation and distribution of petroleum products have warned that Ghanaians will continue to pay more for petroleum products as long as the cedi continues to depreciate.
According to them, now that Oil Marketing Companies (OMCs) have started announcing their ex-pump prices for petroleum products and displaying these prices at their retail outlets from yesterday, continuous depreciation of the cedi will only result in persistent price increases as petroleum products are purchased in dollars
They noted that the recent increases were purely fuelled by foreign exchange losses as a result of the fall of the cedi, and not necessarily the rise in crude oil prices.
At the time of going to press yesterday, the cedi was being exchanged at GH₵4.2 and sold for GH₵4.4 for $1 at the forex bureau in Accra.
This year, the cedi has depreciated by over 23% over against the dollar. Last year, the cumulative depreciation was 31.2% compared with 14.5% in 2013.
To mitigate the harsh effects of the full deregulation, the National Petroleum Authority (NPA) has reduced the margin of OMCs by 0.067 pesewas which means the OMCs would lose GH₵2 million of their margin every month.
The NPA has also reduced Primary Distribution Margin (PDM) by 2 pesewas.
According to information gathered by The Finder, NPA has also reduced the margin for Bulk Oil Distributors, all in an attempt to minimise the impact of the full price deregulation.
When contacted, Mr Kwaku Agyeman-Duah, industry co-ordinator of OMCs, told The Finder that even though deregulation commenced yesterday, it would take about eight weeks to achieve full price deregulation.
He explained that during this period, NPA, OMCs and other stakeholders would make sure that all stations are conversant with the formula for setting the prices in order to protect the customer.
Concerns have been raised over this new policy in relation to timing, the pricing and the quality of products which will be sold to consumers, but Mr Agyeman-Duah said full price deregulation would save the country from acute fuel shortages.
Some critics have been quick to rubbish the 12% reduction in the second half of last year, considering the nearly 60% drop in the price of crude oil.
Mr Agyeman-Duah explained that with deregulation, Ghanaians would enjoy the benefit of crude oil price falls.
The severe impact of Special Petroleum Tax of 17.5% and the mitigation levy being proposed by government will be felt when prices of crude oil begin to rise.
Already, Special Petroleum Tax of 17.5% was imposed on selected petroleum products in November last year.
Currently, the cost of levies, VAT and distribution margins sum up to 42.10% and 39.87% on the prices of petrol and diesel respectively, according to industry watchers.
Ironically, Ghanaians have enjoyed only 12% reduction in the prices of petroleum products.
Fuel price adjustment, which is upward, has many ramifications on the micro and macro economy of Ghana.
In other jurisdictions, what is done when world prices rise so much above what people can bear is for the government to cushion people by reducing taxes, which currently constitute 40% of ex-pump price of the product.
Prices of petroleum products go up 4%
Prices of the various petroleum products went up by 4%, with the exception of premix fuel and residual fuel oil.
The price hikes have been influenced by the rising prices of petroleum products on the world market and the cedi’s depreciation against major trading currencies.
The 4% increment is the maximum price that no Oil Marketing Company (OMC) can go beyond.
OMCs can, however, sell their products below the 4% price under the full price deregulation of petroleum products, which kicked off yesterday.
Sources say there will still be some marginal increases in the coming weeks until subsidies that have not been fully paid for are cleared.
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