The matter in which the National Petroleum Authority (NPA), a regulator of the petroleum downstream industry in Ghana has been ordered by an Accra High court to abolish the ex-refinery differential is a bit worrying if not confusing.
Mr. Kwaku Kwarteng, a former government spokesperson on finance under the erstwhile Kufuor regime and the NPP parliamentary candidate for Obuasi filed a writ in court in September 2009 praying the court to abolish the ex-refinery differential claiming it is an illegal margin smuggled into the price build-up of petroleum prices by the NPA.
The Court upheld the case of Kweku Kwarteng and ordered the NPA to remove the ex-refinery differential from the prices of petrol, kerosene, diesel, LPG and MGL local.
However, the Acting Chief Executive Officer of NPA, Mr. Alex Mould have also argue that the the judge did not understand the constitutive elements of the pricing formula, the power and authority given to the NPA to determine these elements and how the price build up was derived from the formula-hence the ruling.
According to him, the claim that the ex-refinery differential was introduced to the price build up in 2009 is not correct. Mr. Mould explained that the ex-refinery differential was introduced in the price build up in last quarter of 2006.
At the time Professor Ivan Addae-Mensah and Mr. John Attafuah were the Chairman and Chief Executive of NPA respectively. This was after wide consultations with all key stakeholders in the petroleum sector including Petroleum Service Providers (PSPs) and the Ministry of Energy, he added.
The fact as we all know it is that the NPP introduced the ex-refinery differentials in 2006.
The ex-refinery differential was created to dampen the sharp swings in prices of petroleum products through a stabilization mechanism. This mechanism, was supposed to operate as per the NPA Board’s instructions. NPA calculates the pump price two times a month.
The NPP again passed a deregulation law (The National Petroleum Authority Act, 2005). The National Petroleum Authority (NPA) was subsequently set up in accordance with the law to carry out its mandate of moving petroleum prices broadly in line with international market.
They also introduced TOR Recovery Levy. Though we were made to believe that the TOR RECOVERY LEVY imposed on the tax payer was going to pay off the TOR debt, the money was diverted to finance a “government communication strategy” in 2008.
The TOR Debt Recovery Fund Levy had up to December 31, 2008 accumulated GHC720 million or 7.2 trillion cedis. It took the hard work of the current NDC administration to bail out TOR for the refinery to continue its operations.
Today, the same NPP have turn round and gone to court to ask a judge to declare the ex-refinery differential as illegality and want it abolished.
The question is why did Kweku Kwarteng and his boss introduced the ex-refinery differential? Was it because of politics of convenience or is a case of when they are in power, they wear different spectacles and when in opposition, they see everything from the utopian point of view?
I shall be back!!
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