By Adnan Adams Mohammed
In a move designed to buffer Ghanaians against the volatile international oil market, the National Petroleum Authority (NPA) has slashed the price floors for the April 16 pricing window.
While the decision has forced transport operators to shelve planned fare hikes, industry experts warn that the intervention comes with a GH¢200 million price tag for the government and a mounting debt crisis for private oil companies.
As at last week, the price of diesel has seen its most significant drop in recent history, falling from GH¢17.10 to GH¢16.10 per litre. Petrol prices followed with a marginal decrease to GH¢13.27. Major retailers, including GOIL and Star Oil, have already adjusted their pumps to reflect these new floors.
The government’s “necessary sacrifice”
The intervention, approved by Cabinet, is a direct response to global price hikes fueled by geopolitical tensions in the Middle East. According to the Energy Ministry, the government is absorbing GH¢2.00 per litre on diesel and GH¢0.36 per litre on petrol for the next one month period.
“This will lead to a net loss of about GH¢200 million that could have accrued to the government, but it is a necessary sacrifice to bring relief to the people of Ghana,” stated Richmond Rockson, Spokesperson for the Ministry of Energy.
This financial cushion was enough to convince transport unions to back down from a proposed 20% increase in fares, providing immediate relief to millions of commuters.
Industry fears: “We are financing government policy”
However, the celebration at the pumps is not shared by the Chamber of Oil Marketing Companies (COMAC), Dr. Riverson Oppong, CEO of COMAC, raised the alarm that the relief is being funded through industry operational margins rather than tax cuts.
“The relief… stems from operational margins of the industry, and it has not touched any tax or levies that go into the government coffers,” Dr. Oppong argued. He warned that Oil Marketing Companies (OMCs) are effectively being forced to pre-finance the government’s social intervention.
“Is just unfortunate… the downstream business is always receiving the burden for the government; we are the ones always coming to solve problems for the government,” Dr. Oppong added, noting that for every 10 million litres lifted, a company could face over GH¢600,000 in debt due to the delayed reimbursement from the state.
The lag in economic impact
While the price at the pump has dropped, the Africa Centre for Energy Policy (ACEP) cautions that the broader cost of living may not fall as quickly. Ben Boakye, Executive Director of ACEP, explained that the “pass-through effect” of fuel prices is notoriously slow.
“You’re not going to have goods and services reduced or the impact reversed almost immediately,” Boakye noted during a Joy News interview. “Businesses often delay passing on cost reductions because people always want to make a margin. They want to watch this space to see whether they can even keep the same prices.”
What lies ahead?
As OMCs begin negotiations with the Ghana Revenue Authority (GRA) for tax payment delays to ease their liquidity crunch, all eyes remain on the Middle East. The current relief measure is set to last only 30 days. If global crude prices remain elevated, the government will face a difficult choice: extend the costly GH¢200 million-a-month subsidy or allow the prices to surge, potentially reigniting the threat of transport strikes and runaway inflation.
