News Guide Africa

Tag: IES

  • Fuel shortage imminent as cedi falls amidst oil prices spikes – Think-tank

    Fuel shortage imminent as cedi falls amidst oil prices spikes – Think-tank

    Adnan Adams Mohammed

    An energy think-tank has indicated that the country could experience a fuel shortage in the coming days.

    He said the shortage will be influenced by the depreciation of the cedi and the increase in oil prices on the international market.

    The Russia-Ukraine invasion induced unprecedented spike in crude oil and gas prices is troubling many economies. This, coupled with the escalating U.S dollar exchange rate to the local currency (Cedi) threatens petroleum products supply in the country.

    “I regret to announce this bad news. I hope it doesn’t happen. What we have observed over the past few months within the downstream sector of the Petroleum industry is that the depreciation of the cedi and the international oil price rise is impacting negatively on their working capital”, said, the Executive Director of Institute of Energy Security (IES), Nana Amoasi VII.

    “Between the last few weeks, the cedi has depreciated from about GHS 7.00 to GHS 7.4 giving a clear 40 pesewas on their business. If we are bringing the same quantity of 600 metric tones today, you will need GHS 7.40. That will amount to about GHS 4, 440 and so 30,000 metric tonnes in the next window, you will need an equivalent of about GHS 7.2 million. A clear depletion of wiring capital.”

    These factors,  according to him, will lead to the importation of less fuel into the system.

    “If the situation continues and it is sustained, we will see a fuel shortage,” he added.

    The Chief Executive Officer (CEO) of the Ghana Chamber of Bulk Oil Distributors, Senyo Hosi held a conflicting view.

    “Not at all, there won’t be an imminent shortage of fuel. I can understand their concern. It is legitimate. But we need to understand that this will not be the first time we will be working with prices around $1000 per metric tonne.

    “What we just have to do is to anticipate and make sure that we move credit alongside the same levels required to sustain prices.”

    He indicated that stakeholders have preempted the situation.

    “We have been proactive about this. We have been engaging the Central bank to deal with the issues of supply.”

    “We have also been engaging the NPA as well as the International oil traders to find ways to deal with the credit crunch that we may face because of the rising prices.”

    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 close of the month.

    The National Petroleum Authority (NPA) has already said 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 earlier said.

  • Fuel price spikes: NPA to remove taxes to manage prices

    Fuel price spikes: NPA to remove taxes to manage prices

    Adnan Adams Mohammed

    As consumers of petroleum products keep calling on government to intervene to help tame or reduce the rate of increase in prices, the National Petroleum Authority (NPA) has assured of a possible solution.

    The Authority indicates that, discussions are ongoing with the Ministries of Finance and Energy to find a manageable solution to the persistent rise in fuel prices.

    Within the past few weeks, prices of fuel at the pumps have consistently rise to hit an all-time high of about GHC8.30 per litre as at last week. Consumers have attributed the spikes to exchange rate escalation and too many taxes. But, NPA believes the discussions with the ministries 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 has said.

    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 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 done 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.