Dr. Mohammed Amin, Executive Director, Africa Center for Energy Policy (ACEP)
Dr. Mohammed Amin, Executive Director, Africa Center for Energy Policy (ACEP)

The Chief Executive of National Petroleum Authorities, Hon Moses Asaga ( NPA) has collaborated the call by African Center for Energy Policy (ACEP) that government should take a bold step towards implementing a full deregulation of the Petroleum downstream sector.? This, ACEP say and as agreed by Hon. Asaga that will prevent the recurrence of the last week?s hoarding and subsequent shortage of Petroleum in the country.

?Another area that has caused this is Price differential on Petroleum products which government has absorbed, constituting indebtedness to the Bulk Distribution Companies? (BDC) that sparked the shortage and ?which government?s failure to budget for, leading to payment failures.?? These run into Gh ? 1.3 billion from mid 2011 to December 2013. These debts and exchange losses associated with them have accounted for the present challenges? ACEP says.

Further explaining their position, Dr Adam showed the causes of these hydra-headed problems are not ?far-fetched as they are political and fiscal?. ACEP observed that ? the social impact of subsidies have gone on for? a long time and it is time to consider its financial sustainability as signals from the global oil market show more difficult times for pricing ahead?.


Agreeing with the position of the ACEP on Newsfile at the weekend , Hon. Asaga revealed that researched conducted by his outfit clearly calls for a full deregulation of the Petroleum pricing by motorist in both Kumasi and Accra and people are prepared to pay the right prices in other that the product will be available on the market.


To this end, NPA is currently sensitizing the public that time has come for Ghanaians to pay the right price of fuel. Adding that people go to shopping malls to pay 17% tax on items and yet are unwilling to pay ?7.8 % tax on fuel at the pumps and compared it to U.K where it is 60%. But the host said it was a lazy approach. ?But being a social democratic party, we want to support or cushion the hardship that comes with it.? Pushed to tell when such a policy will be introduced, Mr. Asaga explained that will be determined when all various stakeholders have been dealt with. He mentioned Trades Union Congress (TUC) as it affects transport, Ghana Private Road and Trades Union (GPRTU) and other bodies to arrive at a consensus.

The former Finance Minister added that the process of deregulation will be gradual but certainly it will be before close of the year.? ??He also explained that timing will also depend on when government is ready as NPA is ready with the technical work to advice government. Again the current difficulties in the economy are not a good timing which may account for government delaying the process.? Undoubtedly, he revealed that there will be price hikes in the course of the year.


?Stating the position of ACEP on the difficulties and shortages Ghanaians had to endure for about a week with its attendant absenteeism, long queues at the pumps and the deliberate hoarding by the pumps in anticipation of price hikes, Dr Mohammed Amin Adam said the situation could force spikes and shocks in the economy which was not good for the country. The interference of the ex-refinery price is of no use to Ghanaians. He explained that while some argue that there is no subsidy in the pricing, their checks show that indeed there are two stages of it.

Cross subsidization ?

?There is the first issue of cross subsidy build up of products, not all products attract the levies and such products as Kerosene does not attract the state?s Tema Oil Refinery (TOR) recovery levy. What has come to be known as TOR debt is a levy on the ex-refinery pump price that is collected to pay debts owned local Banks in the country. The road fund and the LPG all do not. ?And these are the arrears where Government subsidies are accumulating running into billions owned to BDC?s who sparked the whole brouhaha leading to the countrywide shortages seen two weeks ago. ?In 2013 government lost Gh ? 33million on these exemptions. Similarly, another Gh? 92 million debt was accumulated as a result the statement indicated


Addressing the press, he proposed that ACEP strongly believes that Government should stop petroleum subsidies and implement measures that reduce the adverse effects of the market prices on the poor. But if Government is not taking that it should consider the option of increasing domestic refinery capacity.

Source: Seibik Bugri


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