Ghanaians could pay more for fuel following intentions by government to allow bulk oil distributing companies and the oil marketing companies to quote their own prices at the pump station.
The move which will see removal of entire subsidies could be part of a prescription by the International Monetary Fund which bailed out Ghana with $918 million in April 2015 to help stabilize the ailing economy.
Already one of the conditionalities of the bretton wood institution has led to an increment in the Bank of Ghana’s monetary policy to 22 percent, increasing commercial banks lending rates.
Media reports indicate that the BDCs and OMCs will by the middle of June this year allowed to quote their own prices for petroleum products. This is after all stakeholders have met to discuss thoroughly how the project will be carried as well as public education of consumers.
The move when it happens will limit the National Petroleum Authority (NPA) to only regulation of the downstream petroleum sector and not pricing of fuel.
However, fuel prices could go up due to mainly exchange rate fluctuation.
The Africa Centre for Energy Policy (ACEP) has blamed the challenges facing petroleum pricing and the large under recovery on the mismanagement of the macro economy, particularly the exchange rate.
The local currency started the year at GH¢3.25 to one US dollar but less than half a year the Cedi is trading at about GH¢4.02 to the American currency.
“We can reduce under recovery to a large extent and improve petroleum pricing if we can improve our macro economy”, Mohammed Amin Adam, Executive Director of the Centre said recently when he spoke on the topic “Is deregulation possible in Ghana?”
Mr. Adam said consistent government intervention in petroleum pricing had affected and almost crippled bulk oil distributors (BDCs), adding that though he supports subsidies, “am not in favour of subsidies government cannot finance.”
The Chamber of Petroleum Consumers on its part urged government to take its hands off petroleum pricing.
Its convener, Duncan Amoah, explained that “if deregulation is properly done in this country consumers will pay less for fuel.”
Mr. Amoah again said the nation could be worse off if it does not manage its petroleum supply chain including pricing well.
He also called for equal treatment for both the Tema Oil Refinery and the BDCs, adding “if TOR was given the same attention as the BDC, pricing of petroleum products will be better”.
“TOR must not leave the market for private sector operators to dominate. It is dangerous.”
Former CEO of the National Petroleum Authority (NPA), Professor John Attafuah said the lack of political has also delayed deregulation, noting that the issue of subsidies must be thoroughly debated among stakeholders.
“South Africa continues to have subsidies. Go to Kenya and there is nothing on subsidies. It is up to us to take a decision on that.”
Prof. Attafuah also expressed concern about the way the country has been managing the petroleum pricing formula, adding “the pricing formula is wrong.”
However, he said “if we move quickly to a fully deregulated market, I think it will benefit us a lot.”
Prof. Attafuah said the BDCs must be left alone and allowed to operate efficiently. “I’m scared if we say the BDCs are the problems. They are private businesses doing their own work.
Petroleum pricing has been fraught with many challenges for some time now.
For instance, when crude oil price dropped from about $110 to $55, prices were reduced marginally with the excuse that the rest of the windfall will be used to settle arrears of the BDCs.
However when it increased to about $65 recently, prices were adjusted by about 9.0 per cent.
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