NewsWest AfricaGhanaians up in arms over fuel subsidies and price hikes


Posted on Wednesday, 20 February 2013 16:43

Ghanaians up in arms over fuel subsidies and price hikes

By Lawrence Quartey

Fiery debates over fuel subsidies and recent fuel price hikes continue to rock Ghana following a move by the country's petroleum authority to support the International Monetary Fund's position on financial assistance.


Ghanaians, however, still enjoy subsidies on petroleum products despite recent external pressure on government to withdraw them and fuel price hikes, generating heated debate in the media.

The International Monetary Fund advised the government of Ghana to revise the pricing of petroleum products and suggested the removal of subsidies on the products.

The Integrated Social Development Centre (ISODEC), a civil society organisation that fights for the poor, responded swiftly, arguing that the removal of subsidies will lead to higher fuel prices and could have undesirable effects for the economy.

"It will mean higher transport cost for most workers, higher food prices, higher production cost for the manufacturing sector where boilers are used and where as a result of unreliable supply of electricity, generators tend to be used a great deal.

"It could also result in higher cost of utilities such as water and electricity as fuel constitutes a substantial component of their production cost," ISODEC said at a press conference.

On Sunday the National Petroleum Authority (NPA) announced a fuel price increase to the chagrin of many Ghanaians.

Reaction to the announcement was immediate, with misunderstandings the order of the day at fuel stations, while emotions were whipped.

Passengers argued on one hand with bus conductors and drivers and motorists with fuel attendants on the other over what price to pay and for how much fuel.

Observers say fuel stations, with the supervision of country's standards authority, usually recalibrate their pumping machines to reflect current prices, after the revision of fuel prices.

But this did not happen at fuel stations on the Sunday of the announcement.

With growing misunderstanding in the media over the IMF demand and price hikes, the NPA came out to state that in spite of the increment, government still maintained its subsidies on all petroleum products.

It said the current adjustments were arrived at based on the crude oil price of $116.00 per barrel and an exchange rate of GH¢1.89/USD.

Alexander Mould, NPA chief executive, said for premix fuel the government maintained a subsidy of 73 percent; 8.0 percent subsidy on premium, 52 percent on kerosene, 6.0 percent on gas oil, 13 percent on marine gas oil (local), and 35 percent on residual fuel oil (RFO).

He explained that without government intervention, the consumer would have been paying GH¢2.21 per litre for petrol instead of GH¢2.0496, for instance.

For LPG, the price would have been GH¢2.28 for LPG per kg instead of GH¢1.9485.

Petrol and diesel went up by 20 percent; kerosene up by 15 percent, marine gasoil local and residual fuel oil (RFO) and 50 percent for LPG.

The price for premix fuel remains unchanged at GH¢0.5427 per litre.

But while Ghanaians still enjoy fuel subsidies in spite of the IMF advice, the NPA says it supports the Bretton Woods institution's position.

The NPA argues that the subsidy on fuel is costs Ghana 2.4 billion cedis ($1.3 billion) and it is expected to rise 140 percent, if nothing was done.

The Acting Governor of the Bank of Ghana also supports the view to withdraw the subsidies, saying they are unsustainable and too risky to the economy.

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