Ghana to expect further fuel price to increase

SEL Fuel Station
SEL Fuel Station

Consumers of petroleum products in the country are actually suffocating to contend with the rate at which prices are been increased in recent weeks.

In recent past weeks, prices have been adjusted upwards by the various pump stations within a range of 7 to 10 percent.

The price of fuel is at an all-year high in September with Diesel selling at GH¢4.29 per litre, and Petrol selling at GH¢ 4.23.

In July, diesel was sold at about GH¢ 3.77 per litre, while petrol was sold at GH¢ 3.76.

Despite the increases, commercial drivers have decided to stay the prices on transport fares, a decision government has welcomed.

Pressure is mounting on government to arrest the hikes in the prices of petroleum products.

Despite numerous calls on the government to intervene by consumers and other stakeholders, it seems the worst is yet to come as the Chamber of Petroleum Consumers-Ghana (COPEC) has warned there could be increase in fuel prices if government does not take immediate steps to halt the trend of hikes in the petroleum products.

The Chamber, in a statement, said the rising cost of fuel prices in the country has a direct impact on general cost of living and by extension inflation, and must be curtailed immediately.

According to the Chamber, transport operators have been fair and magnanimous around this period but cannot be expected to remain unconcerned for a very long time and could eventually increase their fares and charges.

“We also believe that scaling down on taxes will be much easier on the government revenue mobilisation targets if the government through the Ghana Revenue Authority plugs the various revenue leakages as far as the illegal fuel operators downstream continue to remain in business and depriving the government and the state the much needed resources and revenues,” the statement said.

COPEC, has therefore petitioned President Nana Addo Dankwa Akufo-Addo to review some of the tax components in the petroleum price build-up to bring relief to the citizens.

The petition, which was signed by the Executive Secretary of COPEC, Mr Duncan Amoah stated that the rising fuel prices in the country had a direct impact on the general cost of living and inflation.

Among a tall list of demands, COPEC requested accountability of the use of the road fund levy of 40 pesewas charged per litre of fuel to know what the fund had generated so far since it was increased from eight pesewas to 40 pesewas.

The road fund is earmarked for road infrastructure in the country and is estimated to yield a minimum of GH¢100 million every month.

The chamber is also demanding a better and proper explanation for the utilisation of the price stabilisation and recovery levy, which it says is a mitigation for the stabilisation of petroleum prices when prices rise on the local market and international market prices are not mitigated.

For every litre of petrol, there is a 12 pesewas levy and 10 pesewas charge for every litre of diesel on the consumer. The levy was instituted in 2014.

COPEC is also calling on the President to merge the Primary Distribution Margin and the Unified Petroleum Price Fund to ameliorate the burden of consumers on the already packed levies and margins built on the price template.

The unified petroleum price fund levy is 13.5 pesewas per litre, while the primary distribution margin is 7.5 pesewas per litre.

These, according to the petition, seemed to be performing the same function in the price build-up of petroleum price. Those levies were charged to ensure that products moved from one part of town to another without added cost to the consumer.

COPEC also wants a rethink of the BOST margin of three pesewas per litre, since BOST is in fuel trading as all other depots in the country and should, therefore, not be treated differently.

The Special Petroleum Tax was also up for a rethink. Currently, it is charged at 15 per cent of all ex-depot price, which is a summation of all the taxes.

The chamber wants the National Petroleum Authority (NPA) and the Ministry of Finance to critically analyse the tax element on the price build-up. It is currently 50 pesewas per litre.

The chamber contends that fixing of a specific amount instead of the current 15 per cent charge will prevent it from fluctuating or increasing anytime the other indices preceding the ex-depot price increase.

Repositioning of the SPT from its current ex-depot price position to ex-refinery will curtail the element of double taxation as it stands now.

COPEC, therefore, called for the scaling down of taxes on petroleum products, which it says will be much easier on government revenue mobilisation targets if the government plugs the various revenue leakages as far as illegal fuel operators downstream are concerned.

However, the Chief Executive Officer of the National Petroleum Authority (NPA), Hassan Tampuli, has said that government has not failed in its promise to remove fuel taxes, hence cannot render an apology to citizens in that regard.

According to him, the government has barely spent 10 months in office and therefore cannot be said to have failed in honouring the promise of reducing the price of fuel.

Mr. Tampuli’s comment comes on the back of demands by the minority in Parliament that the government apologizes to Ghanaians for failing to honour their campaign promise to reduce fuel prices, by scrapping some taxes on petroleum products.

The Deputy Ranking Member on the Mines and Energy Committee of Parliament, Adam Mutawakilu, at a press conference said the NPP had been elected on the back of repeated promises to scrap ‘nuisance taxes’ imposed by the previous government, and was going to reduce the cost of fuel for the ordinary Ghanaian, but has failed to do so nine months in office, leading to a hike in fuel prices.

Since January 2017, when the NPP government took over office, fuel prices have increased three times, and hit an all-year-high in September, with petrol selling at an average price of GHc4.29 at the pumps, and diesel going for an average of GHc4.23 per litre.

But, Hassan Tampuli in an interview said that, “Did we make a commitment to remove the excise tax? We did not, but we have removed completely the excise tax. This is not an insensitive government. We have even done things that we didn’t promise to do, how much more things that we promised to do, we will do it, but we will do it in the fullness of time,” he said.

In 2015, when the previous government increased petroleum prices, the then NPP opposition, described the government as being insensitive.

It said it would immediately scrap Energy sector levy that resulted in the increment of the taxes when it comes office, but that is yet to happen.

The NPA boss has said the increase in fuel prices under the current government unlike the previous one, was due to increase in fuel prices globally.

He believes that, the government must be given more time honour the promise it made to Ghanaians with regards to the price of petroleum products.

“it is less than one year since the government came to power, and we have to apologize for all that we promised to do in our manifesto? Everything that we said we will do in our manifesto, we had to do that within nine months, and we haven’t done that so we have to apologize… Government continues…we cannot do everything in one day,” he said.

Also, the Deputy Energy Minister, Dr Amin Adam Mohammed has said the government cannot be blamed for recent petroleum price hikes which have gotten many drivers, especially commercial drivers angry.

He insisted that the hikes are attributable to market and external forces which are beyond the control of government. He said government is trying its best, despite a difficult market and external forces.

Chronicling the different components of petroleum pricing which include price of crude oil which is determined by the global market, levies and taxes as well exchange rate depreciation, the minister said government has played its role in ensuring price reduction but the market forces will not let it.

According to him, the government in its 2017 budget reduced the special petroleum taxes from 17.5% to 15% and went ahead to scrap the excise duty on petroleum products.

These interventions coupled with a better management of the economy which has kept the cedi fairly stable should have led to the reduction in petroleum prices, the minister pointed out.

However, he was quick to add that increased demand in crude oil on the international market triggered by the Texas hurricane and other factors have forced prices of crude oil to go up on the international market.

He said as a result of the deregulation policy in Ghana, prices had to be adjusted in line with increases in crude oil on the international market.

Dr Amin Adam said government is concerned about the increases and may soon implement measures that will ease the effect of the increase on Ghanaians.

-Adnan Adams Mohammed

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