Thursday, 23 October 2014

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Fuel prices go up by 15-20% in Ghana

Fuel prices have gone up in Ghana by between 15 and 20 per cent after days of debate on whether government should maintain prices, given the negative effects on the economy.

An official statement by the National Petroleum Authority (NPA) quoted by an Accra-based radio station, JoyFM, on Sunday said petrol would now be sold at 9.22 Ghana cedis a gallon (2.0496 Ghana cedis a litre), up from the previous 7.00 Ghana cedis (US$1.00=1.89 Ghana cedis)

The statement signed by Chief Executive of NPA Alex Mould said the new prices took effect from Sunday.

"The maximum indicative price for a litre of petrol will be 2.0496 Ghana cedis and the maximum indicative prices for a litre of diesel will be 2.0683 Ghana cedis (9.31 Ghana cedis per gallon)," the statement said.

Kerosene is up by 15 per cent and will be selling at 104. 65 pesewas per litre.

Liquefied Petroleum Gas (LPG) has increased by 50 per cent and will be selling at 194.85 Ghana cedis per litre or 24.36 Ghana cedis per a 12.5 kg cylinder.

The statement said the new prices were based on the crude oil price of US$116.00 per barrel and an exchange rate of 1.89 Ghana cedis per US dollar.

"the workout above indicates that government has maintained some subsidy on the prices of petroleum products," the statement said.

The Central Bank, NPA and several people have asked for the removal of subsidies but this suggestion has been met with resistance from others who argue that the fuel price hike would create more difficulties for the poor.

The Bank of Ghana (BoG) said last week that it was crucial for the government to remove fuel subsidies in order to sustain the economic gains attained so far.

It argued that the high subsidies on fuel were unsustainable and risky to the economy, cautioning that the pressure related to fuel subsidies, utilities and wage/salary settlements could act to offset the gains made in macroeconomic stability.

The acting Governor of the BoG, Dr Henry Kofi Wampah, said last year the government spent close to 1.2 billion Ghana cedis on fuel subsidies, and that the amount was expected to climb to 2.4 billion Ghana cedis this year if fuel subsidies were not removed.

That, coupled with a high wage bill of 7.5 billion Ghana cedis against a target of 5.6 billion Ghana cedis, presented a major challenge to the economy.


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