Clueless Gov’t Appease Ghanaians With 1.6% Fuel Price Reduction

The realities of the economic collapse from galloping commodity prices have jolted the debt-guzzling administration of the Akufo Addo administration into a belated action of reducing petroleum prices by about 1.6%.

In his much anticipated public address on Thursday, Finance Minister, Ken Ofori-Atta who is fingered as a major culprit to Ghana’s economic collapse, claim the reduction is aimed at mitigating “the impact of the rising price of petroleum products at the pump, for the next three months.”

He disclosed that discussions are underway with the National Petroleum Authority (NPA) to also reduce margins at the pumps “within the spirit of burden-sharing.” These measures are expected to start in April 2022.

“The Government will do all it can to ensure consistent supply of fuel and manage the rate of the ex-pump price increase by ensuring that BoG has access to adequate foreign exchange,” he said.

These measures meant the government has been forced to reduce part of the price build-up entrenched in the petroleum prices, including a two-pesewa reduction in the BOST margin; a nine-pesewa reduction in the Unified Petroleum Pricing Fund (UPPF) margin; a one-pesewa reduction in the Fuel Marking Margin (FMM) and the Primary Distribution Margin (PDM) reduced by three pesewas per litre.

Some of these margins currently being gleefully reduced by the government were advocated for several months ago by stakeholders in the downstream oil marketing industry. But the Akufo Addo administration only turned a deaf ear to such suggestions.

However, the current hopeless situation on the world market price of crude oil, largely due to the Russian-Ukraine war is driving prices through the roof and is impacting local economies worldwide.

Prices of petroleum products have skyrocketed within the last few days.

Diesel is currently selling between GH¢10 and GH¢11 per litre, while the price of petrol has crossed the GH¢9 mark at some filling stations.

If the government of Ghana had not moved in fast to appease the situation with the seeming mitigation effort, the high fuel prices in Ghana would uncontrollably shoot inflation through the clouds and could spark civil unrest as experts had warned.

The Finance Minister acknowledged this fact, saying the rising fuel prices at the pump are largely influenced by rising crude oil prices on the international market and exchange rate depreciation.

According to him, while the rise in crude oil prices in the international market should have benefited the country on a net basis, Ghana’s imports of petroleum products amounted to 5.2 times the value of its crude oil export proceeds.

“In 2022, we exported [$3.9 billion] of which Ghana’s portion was $513 million. However, we imported [$2.7 billion] of crude oil and finished products. The purported windfall gain in foreign exchange is a mirage,” the Finance stated.

“From January to date, the average ex-pump price of diesel and petrol has increased by 57% and 45% respectively,” he explained.

However, the same Finance Minister has been consistently accused by the Public Interest and Accountability Committee (PIAC) for diverting huge sums of crude oil revenues due Ghana to unknown accounts and had been found flatfooted when questioned to account for how the government expended the component of the oil funds in the Annual Budget Funding Amount (ABFA).

Also, the Finance Minister announced a 50% cut in fuel coupon allocation for state appointees effective February 1, 2022, as part of measures to mitigate the economic hardships in the country.