The Institute of Energy Security is calling on the government to make the existing interventions and mechanisms to cushion the local consumers against the rising cost of fuel on the world market work as intended.
According to the Executive Director of the Institute, Nana Amoasi VII, although Ghana has mechanisms intended to cushion consumers against the rising cost of fuel, they are not working effectively. “The Tema Oil Refinery (TOR) system is in a coma and the BOST system has not been able to keep any strategic stock.
Maybe we may have to reconsider its application and management,” he said. Nana Amoasi VII told Alfred Ocansey on 3FM Sunrise Morning Show that there are existing interventions to mitigate the impact of the rising cost of fuel on the economy but as to whether they work or not is the problem. He indicated that in the price build up, there is stabilization and recovery levy and we also have Tema Oil Refinery (TOR) that can manage both supply and price risk to some extent.
“Unfortunately the Price Recovery Levy over the years has not been able to stabilize fuel prices for Ghana and we have not even attempted to go into the Stabilization Fund to cushion consumers in terms of subsidies” Nana expressed He advised that if the government wants to divert the Stabilization and Recovery Levy Fund for purposes of keeping strategic fuel stock may be we can use it to fund that arrangement and ensure we have the right Oil and Gas Traders on the Bulk Oil Storage and Transportation Company Limited (BOST) desk the exposure effectively.
In addition, if we increase the quantity of crude refined at TOR and manage the economy well and restructure the refinery, they could help bring some relief to consumers. Nana Amoasi VII further stressed that if other countries that are equally facing the challenges imposed by COVID and the Russia Ukraine war like Kenya, South Africa and Egypt have been able to manage their fuel prices through subsidies, interventions and good management of their own forex then Ghana can do same
According to the projection by the Institute of Energy Security, a gallon of petrol may sell at GHS 45 whereas diesel may go for GHS 54 plus, thus; GHS 10 per liter and GHS 12 plus per liter for petrol and diesel respectively. The prediction is based on an accumulation of several fundamental and technical factors including international reports, pricing history and pattern. Price of gasoline on the international market went up by 11% over the last week.
Unfortunately, we have to convert the cedi to dollars in order to procure the fuel from the world market and the cedi also declined in value to the dollar. He noted that the price of international gas oil and LPG went down by 5% but because of the decline in the value of the cedi that Ghana should have fizzled out especially for those oil companies that could not procure the dollar at the Bank of Ghana rate. However there will be some stability with diesel but LPG and petrol will have a negative impact of the 11% rise on the world market.