Ghana to increase crude fuel stocks to manage shocks
Terkper said the government is “taking some steps to make sure that when fuel prices rise, through the stabilisation levy, through Parliament, we will be able to manage that better”.
One of the options we will be looking at seriously is strategic stocks as the US, South Africa and other countries do
Oil prices plunged to around $25 per barrel in January this year, the lowest in 13 years, leaving a number of economies dependant on the resource in turmoil.
The oil industry, with its history of booms and busts, has been in its deepest downturn for nearly two decades, energy experts say, leading to revenue cuts in oil exporting countries like Ghana.
Many analysts opined that the tumbling oil prices on the world market were due to aweakened dollar, a slump in United States’ oil inventories and storage space, disruption in oil supplies and market volatility.
However, fuel prices have recovered, climbing by 70 percent since June.
Oil production largely affects Ghana’s economic growth while revenues from oil exports and costs of oil imports affect the government’s budget and macroeconomic performance, necessitating economic managers to think outside the box.
“One of the options we will be looking at seriously is strategic stocks as the US, South Africa and other countries do, so, you have got to manage these things well,” Terkper told a local radio station.
Analysts believe that government’s move to consider robust steps to manage any crude price hikes is justified given that domestic prices often suffer when the price of Brent crude oil falls on the world market.
The fall in crude oil prices has posed serious fiscal challenges to the government as it was forced to revise down substantially oil revenues indicated in its 2015 budget.
Total oil revenues for t2015, dropped by a whopping 58 percent, from 4.2 billion cedis to 1.8 billion cedis.
The decline impacted negatively on the country’s revenues from petroleum taxes.