The Private Enterprises Foundation (PEF), umbrella association for various private sector organisations including in manufacturing, commerce, banking, exporters, insurers, employers, mines and telecommunications, is calling for the review of some components of the petroleum pricing formula.
The PEF has expressed concerns about the lack of transparency regarding the TOR Recovery Levy of 8.0Gp per litre of petrol, which has been collected over the past 10 years, ostensibly to clear debts jeopardizing the effective operations of the countryï¿½s only refinery.
Managing Director of the Tema Oil Refinery (TOR) Mr. Ato Ampiah said recently that the monies accruing from the TOR Recovery Levy were not being applied for its intended purpose. New Energy Minister Emmanuel Kofi Buah had subsequently sought to debunk Ampiahï¿½s assertion.
Workers of TOR have accused government officials of deliberately running down the 45,000bpd capacity refinery so their cronies would benefit from the importation of refined petroleum products.
PEF, in a statement said; ï¿½the public is not aware of the amounts of the debts that have been re-paid, the amount outstanding and how long it will take to completely retire the debt.ï¿½
The Governing Council of PEF has therefore recommended to government to publish the initial quantum of the TOR debt, how much has been paid, what is the outstanding balance, the interest rate on the debt, and the amortization schedule to ascertain whether the country is accumulating enough or in excess to pay off the outstanding.
PEF also recommends that since every consignment of petroleum products delivered into the country are delivered under secured purchase contracts, the actual contract purchase prices should be used in computing the ex-refinery price of petroleum products instead of the current practice of using the two-week average pricing of benchmark oil in the international market.
Under the current practice, the National Petroleum Authorityï¿½s (NPA) formula may result in paying higher prices for products at spot market price, which may be over and above the contract prices at which they were purchased.
The PEF recommendation will therefore eliminate the likelihood of unnecessary costs being transferred to unsuspecting consumers; or conversely prevent suppliers from unduly profiting from the system.
Another recommendation is that the financing cost paid to Bulk Distribution Companies (BDCs) for holding strategic supplies should be based on a defined formula rather than negotiations as is currently being done.
PEF is also questioning the justification for charging an exploration levy on petroleum products when GNPC charges a fee for investors to do their own exploration.
ï¿½Unless there is other justification for this levy, then it should be phased out,ï¿½ the PEF statement said.
The private sector, PEF says, supports full recovery of costs of petroleum products which should be implemented without governmental intervention; however the non-adherence to a generally accepted formula and the subsequent quantum increases in prices has the potential of impacting negatively on the sector, particularly micro and small businesses.
ï¿½The price increases are likely to heighten the agitation for increases in salaries of workers that will in turn increase the cost of production and the provision of services,ï¿½ PEF noted.
The NPAï¿½s petroleum pricing formula, over the past decade, aims at ensuring full cost recovery, revenue generation, and unified ex-pump prices throughout the country through the Unified Petroleum Price Fund, (UPPF).
In addition to procurement and handling charges, and other related charges, parliament imposes taxes and levies on every litre of petrol including excise duty of 2.78ooGp, TOR Debt Recovery of 8.0000Gp. Cross Subsidy Levy of 5.0000Gp, Exploration Levy of 0.1000Gp, Energy Fund Levy of 0.0500Gp and Road Fund Levy of 6.0000Gp.
According to a RadioXYZonline.com report of September 6 2012, then Minister of Energy, Dr Joe Oteng-Adjei, said government had settled GHS 1,137,832,874 of the state refineryï¿½s debt and was hoping to pay off the total outstanding debt of about GHS610.9 million soon after.
The minister reportedly expressed optimism that with such interventions by the government TOR should, in the coming years, be financially sound to operate efficiently.
Three months before, Dr. Kwabena Duffuor, then Minister for Finance and Economic Planning, had reportedly told Parliament that government had issued a three-year bond for GHS445.0 million in March 2010 for the partial settlement of the 1 billion cedi debt TOR owed Ghana Commercial Bank (GCB) in 2009.
According to a Ghana News Agency (GNA) report of June 2012, Dr Duffuor said in April 2011, government again issued a three-year stock certificate to the bank for the remaining GHS572 million following an agreement reached between the bank and government.
Meanwhile, the Private sector operators, stung by recent hikes in prices of petroleum products, are also pushing for clarification and changes to some components in the cost build-up on petroleum products.
Source: Economic Tribune/Ghana
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