The National Chairman of the People’s National Convention, (PNA) Bernard Mornah has called for the scrapping of the National Petroleum Authority (NPA) over its failure to adhere to the proper implementation of the Automatic Adjustment formula.
Speaking at the launch of the political parties’ position on oil and Gas in Ghana, at the Alisa Hotel in Accra, Mr. Mornah said NPA was established to regulate the downstream petroleum sector with the responsibility to ensure efficient regulation of the industry but has failed on its mandate.
“Ghana is the only country in the world where you see petroleum prices increase when the price on the world market in decreasing and you see NPA saying it is applying the automatic adjustment formula”..
His assertion was supported by Mr. Kweku Kwarteng, Member of Parliament for Obuasi South who said an NPP government which would assume office in 2017 would restructure the operations of NPA and ensure that it operates within the laws of the state. He noted that the price of petrol should have been GHC6 considering the current price of crude oil on the international market.
He was surprise that an NDC government that claim to be a listening government would impose an energy levy of petroleum to short change Ghanaians
The process for publishing and applying an Automatic Adjustment Formula for pricing petroleum products to ensure full-cost recovery was completed in 2001. The National Petroleum Tender Board (NPTB) was set up to regulate pricing based on the formula. Since October 2005, the deregulation of the petroleum sector was pushed further leading to the establishment of the National Petroleum Authority (NPA) which replaced the Tender Board and which is responsible for monitoring and publishing ‘import parity’ cost of refined petroleum products in to Ghana based on a transparent pricing formula. The main factors that affect petroleum pricing in Ghana are crude oil prices, the exchange rate, taxes and levies and margins. Now under the enhanced phase of deregulation, the OMCs are responsible for importing crude oil and refined petroleum products. There is no doubt that there is significant public interest in petroleum product pricing exhibited through mass strikes and demonstrations.
Experts have indicated that the over-reliance on petroleum taxes and levies leads to overpricing of petroleum products. Governments mindful of the repercussions – economic or political, have often resorted to tax review in times of difficulty. As an illustration, following extreme volatility in crude oil prices and increased food crisis in 2008, the government of Ghana removed excise duties and debt recovery levies on premix fuel and reduced same on Kerosene and Marine Gas. The government again reduced taxes in early 2009 to mitigate the hardships resulting from crude price increases. Whether these measures in both cases were realistic or not can be traced to the effects of such measures on government revenues and whether such measures are able to keep prices low for a long time.
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