By St. Kyoobi
The Association of Ghana Industries (AGI) says it is not happy with the government?s handling of fuel pricing issues in the country and want stringent measures put in place government action in addressing the challenges.
The Association, which says it is committed to the development of the private sector and the improvement of the business climate in Ghana says the timing for the recent price increment on petroleum prices was bad and ill-advised as it is impacting seriously on businesses.
AGI is of the view that fuel price reviews must be made amenable to the Automatic Adjustment system that allows periodic price reviews, for effective planning.
Expressing its concerns over the issue in a statement to the media, AGI President, Nana Owusu-Afari observed that fuel prices should have been reviewed for the first half of 2012, when the cedi depreciated by about 20%, while crude oil price on the world market averaged an increase of about 8%.
?We note the challenges associated with implementing the automatic adjustment system when such unexpected changes occur in the determinants of fuel price review; namely the exchange rate and world crude oil price,? AGI observed.
The Association has therefore urged Government to develop a system to manage the challenges in the sector. They recommend effective implementation of risk management strategies such as hedging to deal with such situations.
?Government ought to make provisions in the National budget for the fuel subsidies for effective planning and to submit a supplementary budget to cover any unplanned additional subsidies on account of significant changes in the price determinants,? it recommended.
Among its recommendations the AGI has, additionally, called on the government to reinstitute the periodic review of fuel pricing to mitigate the huge impact of such fuel price increments.
The AGI also want government to budget for any fuel subsidy before it is absorbed. ?This should be part of the Budget Statement and Economic Policy presented by Ministry of Finance. This will enable control and prudent financial management.?
They also want government to ?Seek parliamentary approval, if it becomes necessary to exceed such budgetary allocations and fix the Tema Oil Refinery, as soon as possible to ensure the continuous supply of finished products, including residual fuel oil to Industry, among others. In addition we would be adding value to crude oil thereby generating industrial growth and saving forex,? the Association noted in the statement signed by its president Nana Owusu-Afari.
The government last week announced an increment in the cost of fuel prices by 15 to 20% with new prices taking effect from February 17. According to the National Petroleum Authority (NPA), “The maximum indicative price for a litre of petrol will be GHS 2.0496 (GHS9.22 per gallon) and the maximum indicative price for a litre of diesel will be GHS2.0683 will (GHS9.31 per gallon).”
The new prices are based on the crude oil prices of $116 per barrel and an exchange rate of GHS1.89/USD. Per the new prices, petrol will now be sold at GHC 9.22 up from the previous GHC 7. Kerosene is also up by 15% and will be selling at 104. 65 pesewas per litre. LPG is also up by 50% and will be selling at 194.85 per litre or GHS24.36 per a 12.5 kg cylinder.
