Ghanaians are likely to pay more for fuel during the first pricing window in the new year, the Chamber of Petroleum Consumers (COPEC) has announced.
This is due to a cut in global crude supply due to the spreading Omicron virus that has resulted in tightened restrictions.
Consequently, prices on the world market have increased, and the ripple effect is higher prices at the local pumps between 1 January to 16 January 2022, which marks the first pricing window.
“The ex-pump prices of petrol and diesel are expected to surge by 3.7% and 2.5% respectively,” COPEC said in its monthly report on Monday, 3 January 2022.
In nominal terms, ex-pump petrol and diesel prices are expected to increase by 24 pesewas and 17 pesewas, respectively.
In nominal terms, the average surge for both products is 20 pesewas representing 3.1%.
But some Oil Marketing Companies (OMCs) could increase their prices by less than the 20 pesewas increase due to competition.
“If the government suspends the zeroing of the Price Stabilisation and Recovery Levy (PSRL) on diesel, petrol and LPG, then ex-pump prices could surge by at least 34 pesewas,” COPEC added.
The chamber further explained that Brent crude futures settled up $1.56, or 2.1%, at $76.85 a barrel, the highest close since 26 November, and a gain of 4.5% on the week as of 23 December 2021.
Additionally, the U.S. West Texas Intermediate (WTI) crude futures ended up $1.03, or 1.4%, at $73.79 a barrel, to rise 4.1% on the week as of 23 December 2021.
The surge in crude oil prices is due to Libyan supply disruptions cutting the supply of about 300,000 b/d and the lower anxiety towards the new Omicron variant because the variant is containable than previously feared.
In Ghana, the National Petroleum Authority (NPA) indicated that the benchmark price for petrol/MT for setting the ex-pump price of petrol in the 1st Window of January 2022 is $707.95/MT.
Again, the Benchmark price for diesel/MT for setting the ex-pump price in the same window is $641.38/MT.
The NPA set the Ghana Cedi at Ghc6.4040 against a dollar.
Using the conversion factor of 1324.4 for petrol from a metric tonne to litres, 1183.43 for diesel from a metric tonne to litres and a maximum total marketer’s margin and dealer’s margin of Ghc0.75 based on the flexibility of OMC margins, as well as a forward rate of Ghc6.4040 to a dollar, the ex-pump prices for petrol, is expected to surge by 3.7%, and diesel is expected to surge by 2.5%.
Averagely ex-pump prices are expected to surge by 3.1% in the 1st Window of January 2022 from 1st to 16th January.
What can be done to address the situation?
The COPEC-Ghana Executive Secretary told The Ghana Report, “We have a local refinery that we could have leveraged to get some fuel security at lower prices, but unfortunately we don’t think there is a political will to refurbish the Tema Oil Refinery”.
Mr Amoah observed a fully functional refinery would cut the logistical cost, which adds to the price build-up by exporting crude to Europe to be refined before importing back to Ghana.
“They need to get TOR back on stream, and the need for political interference to be stopped holds the key for all for us,” he underscored.
Additionally, he cited the Bulk Oil Storage and Transportation Company Limited (BOST) failure in executing its mandate.
Mr Amoah explained that BOST is supposed to store huge volumes of fuel and release to the market to level prices and check shortages “without overstretching the already burdened Ghanaian taxpayer”.
However, “we do not see that function of BOST, and they are now focusing on trading…which was not the purpose of the BOST Act but to hold strategic stock”.