The National Petroleum Authority (NPA) has disclosed that discussions are ongoing with the Ministries of Finance and Energy, to find a manageable solution to the persistent rise in fuel prices.
It said the deliberations will focus largely on the possible removal of some taxes on petroleum products.
“We are also concerned, there are a lot of discussions we are having with the Ministry of Energy, and we are seeing if together with the Ministry of Finance, we will make some proposals,” Head of Pricing at the NPA, Abass Ibrahim Tasunti said on Eyewitness News.
Fuel prices at some fuel stations have crossed the GH¢8 per litre mark in the first week of March 2022 with predictions that the commodity will sell at GH¢9.00 per litre by the close of the month.
But, Abass Ibrahim Tasunti, maintains that the situation can be blamed largely on current happenings on the global oil economy; thus, the government will play a role in cushioning citizens.
“For us, we don’t make the fiscal and economic policies for government on how we regulate the fuel industry because the pricing is sone according to world formula. If you look at the taxes in the formula, they are approved by Parliament. So, if any of them are to be removed, it has to go back to Parliament.”
In the meantime, the Minority in Parliament is demanding the immediate scrapping of taxes in the petroleum price build-up that have outlived their purpose.
It argues that those taxes constitute about 40% of the price build-up on the products.
Making a strong case for its removal, the minority said such a move would drastically reduce the price of fuel and subsequently relieve Ghanaians who have endured high prices of the products.
“At the time the price of crude in the world was around US$30 we had a problem with the FPSO Kwame Nkrumah crude, so production came down.”
“That is why the Special Petroleum Tax was introduced to help us rake in some revenue. In the 2016 budget, we had introduced sub-clauses that by 2017 this tax should be off and the reason is that by then, we would have sorted the issues with the FPSO Kwame Nkrumah”, Member of Parliament’s Mines and Energy Committee, Edward Bawah said.
The Institute for Energy Security (IES) is also predicting a four percent increase in the prices of Liquefied Petroleum Gas (LPG), Diesel, and Petrol at the pumps in the first pricing window of March.
A barrel of Brent Crude Oil which was going for about $66 a year ago, and $78 at the start of 2022, jumped 7.3% to $103.9 a barrel in February. The price of Liquefied Petroleum Gas (LPG) will experience a 5% adjustment from today, March 3, 2022.
This follows the restoration of the Price Stabilisation and Recovery Levy (PSRL) on fuel products.
The restored PSRL is ¢0.16 pesewas per litre on petrol, ¢0.14 per litre on diesel, and ¢0.14 per kilogram on LPG.
Experts have warned that the restored PSRL and its attendant increase in the price of LPG will further decrease the commodity’s consumption rate and worsen the plight of the ordinary consumer.
LPG is now ¢9.76 per kilogram, translating to about ¢140 for a 14.5 kg cylinder.
The Vice President of the LPG Marketers Association, Gabriel Kumi, has blamed the development on the cedi’s poor performance.
According to him, “once the cost keeps moving up and you have constant taxes and levies, you expect that the price will continue to go up.”
In the first pricing window, the price moved from ¢7.89 to ¢8.12 in December, 2021. In the second window of January, 2022, it went up to ¢8.22.
In the first window of February, 2022, the price went up to ¢8.60 and went up again in the second window to ¢9.29.
Currently, the price stands at ¢9.76.
The LPG Marketers Association say the rapid change in prices is affecting their business due to the declining consumption rate of LPG.
“Business is not doing too well because if you look at the statistics, the consumption of LPG is on a serious decline. So if measures are not taken, and the price continues to go up as it is going now, there will be a lot of negative consequences.”
“Today, some of our members have started laying off workers, and we are not growing. The consequences are quite dire,” Gabriel Kumi added.
Government has set an agenda to make the product accessible to many by increasing consumption of the commodity from 25% to 50% by 2030.
But many have argued this objective may not be achievable, considering the speed with which the commodity price is skyrocketing.
Meanwhile, the National Petroleum Authority (NPA) has said it is discussing with the Finance and Energy Ministries to find a manageable solution to the persistent rise in fuel prices.
It says the engagements will largely discuss the possible removal of some taxes on petroleum products.
The Head of Pricing at the NPA, Abass Ibrahim Tasunti, says the NPA has presented some proposals to Cabinet for consideration.
“We have made some recommendations to the government as to what it can do, but it all depends on the government’s fiscal space. So for us, we look at what can be done to look at the laws available to us.
“Of all the taxes, which one could have been touched? From the law, the Price and Stabilisation and Recovery Levy is the one that could have been used to support the consumer. Our work is to make sure there is fair pricing,” he told JoyNews.
Meanwhile, the Energy Ministry has said Ghanaians will pay back whatever the government spends as subsidies.
According to the Deputy Minister, Andrews Agyapa Mercer, this calls for a conversation that ought to be had among stakeholders as the country strives to fashion out a solution to the problem.
“It’s a process that has commenced. The NPA has sent the letter to us, and we’ve forwarded it to the appropriate authorities; it’s going to be deliberated, and then whatever decision is taken is going to be in the best interest of all of us.”
“If that decision is taken that government has to subsidise fuel, we all ought to know that post the issues being resolved, prices coming down, whatever amount of money government would have expended would still have to be paid back by all of us,” he said.