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Minister of Energy, John Peter Amewu has argued that taxes and levies on prices of petroleum products have been reduced drastically since the New Patriotic Party (NPP) took the reins of government.

Total taxes on fuel, the Minister stated, had been reduced from 40% in 2017 to 26% in 2018.

He cited the various tax interventions implemented by the government since March 2017 to August 2018 to include removal of excise duty on March 16, 2017; reduction of the Special Petroleum Tax rate from 17.5% to 15% on March 16, 2017; and the reduction of the Special Petroleum Tax from 15% to 13% on February 2018.

Others were conversion of the Special Petroleum Tax from Ad Valorem to Specific Tax on February 16, 2018; and the reduction of the Price Stabilisation and Recovery Levies (PSRL) from December 1, 2017; and currently the PSRL had been reduced from 12 pesewas per litre to zero for petrol, 10 pesewas per to zero for diesel and 10 pesewas per kilogramme to 3 pesewas per kilogramme for Liquefied Petroleum Gas (LPG).

Mr Amewu said due to government’s tax interventions, the current prices of both petrol and diesel were selling at GH¢5.12 per litre.

He said the price for the previous window was GH¢4.90 for petrol and GH¢4.94 for diesel, and added that this represents a change in price from the previous window by 4.49% for petrol and 3.6% for diesel.

He said without the government intervention, prices would have been GH¢5.54 for petrol and GH¢5.50 for diesel.

He noted that this would have led to a 13% increase in the price of petrol and 12% increase in the price of diesel, adding that, therefore, as a result of government’s interventions, petrol is 9% less expensive without government’s interventions.

Speaking at a press conference in an apparent response to public outcry over recent fuel prices hikes, Mr Amewu said, “Government has used tax interventions to mitigate the impact of domestic petroleum product price increases.”

Fuel prices exceed GH¢5 per litre 

Fuel prices have hit the GH¢5 mark, with diesel going for GH¢5.18 per litre and petrol GH¢5.14 per litre.

GH¢232m lost from tax reduction measures 

Mr Amewu disclosed that the revenue loss to government from the removal of the Excise Duty and the reductions in the PSRL alone between December 2017 and June 2018 amounted to GH¢232 million.

He said international market conditions have weighed strongly against domestic price of petroleum products as international crude oil prices continue to increase, and currently estimated at $78 per barrel.

He said, therefore, apart from the application of the Price Stabilisation and Recovery Fund to cushion consumers, governments had made progress in its efforts at securing a government-to-government oil supply arrangements to address the supply-side factors of petroleum products prices.

“We are hopeful that these and other measures government is adapting should be helpful in mitigating price behaviour of petroleum products in the foreseeable future,” Mr Amewu stated. 

He said it was important that Ghanaians acquaint themselves with factors accounting for driving the current global prices, which were Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC agreements to cut global production to drive prices of oil, and the decision of the United States to reinstate economic sanctions on Iran.

He said the National Petroleum Authority (NPA) plays a supervisory role by determining the price benchmarks and ensuring that Bulk Distribution Companies (BDCs) and Oil Marketing Companies (OMCs) set their prices in accordance with the Prescribed Petroleum Price Formula, which is based on the components of the import parity mechanism.

He noted that the NPA reviews the indicative prices submitted by each BDC and OMC for every pricing window to ensure that the realistic prices are set by BDCs and OMCs, and to ensure consumers are not taken advantage of in a deregulated environment.

“It is worthy to note that the price deregulation has led to keen competition amongst Petroleum Services Providers (PSPs), thereby keeping prices very competitive,” he said.

He noted that Ghana was a net exporter of oil; however, it must be noted that the government’s receipts from oil exports were not the entire total oil export earnings.

“It is limited to Ghana government share of oil as prescribed in the Petroleum Agreements signed between the government and IOCs (International Oil Companies).”

He noted that besides, Petroleum Revenue Management Act 2011 (ACT 815) prescribes how government spends its receipts from the exports of crude oil.

Mr Amewu said it was, therefore, disingenuous for any person or group of persons to call for government and to set aside the petroleum revenue law and use the oil for other purposes.

He said the government had used tax interventions to mitigate the impact of domestic petroleum product price increases.

Govt taxing Ghanaians responsibly 

Deputy Minister of Energy, Dr Mohammed Amin Adam explained that the prices of fuel at the pumps would have been much higher than what is being experienced if government had not scrapped some of the taxes on petroleum products.

Dr Amin Adam stated that the government was taxing responsibly, pointing, “We can also generate revenue through taxes, but we are doing it responsibly…We have reduced the total tax component in the petroleum product prices from 40% in March 2017 to 26% this year,” he said.

“That is how a responsible government can generate revenue through taxes on petroleum product prices without injuring the welfare of the Ghanaian,” the Deputy Minister assured.

He stated that government’s intervention has rather brought some relief since consumers would have paid more for fuel as the global prices of crude oil surges.

“Without government intervention, prices would have been GH¢554.25 for petrol and GH¢550.75 for diesel. This would have led to a 13% increase in the price of petrol and a 12% increase in the price of diesel. Therefore, as a result of government interventions, petrol is 9% less expensive than it should have been without the interventions. Diesel is 8% less expensive than it would have been without government interventions.”