AFAG hounds Mills… over fuel price increase

The woes of the 10-month Mills led administration has reached a crescendo, as the Alliance For Accountable Governance (AFAG) is angrily chasing government for breaking the social contract it signed with the people of Ghana, last year.

According to the pressure group, if this had happened in some other countries, the citizens would have by now revolted against the President for committing this heinous crime.

Speaking at a press conference in Accra yesterday, a leading member of AFAG, Mr. Stephen Amoah, flanked by another leading member, Mr. Henry Asante, added that the current fuel price increases are not only ludicrous, bogus and unacceptable, but also a clear aberration from the social contract the President had with the citizens of Ghana.

AFAG in principle is not against fuel price increases. However, we believe that a government which believes that a price of ¢51,000 old cedis for petrol at a time when the world market price of crude was US$147 was too high, has no justification to sell the same petrol for ¢52,000 old cedis at a world market price of only US$79 a barrel.

Then candidate Mills promised 'DRASTIC' reduction in fuel prices. It is our intention to hold the President to this promise, which he made to win power in the 2008 elections. However, the explanation by the Government that the recent 5% fuel price increases have been precipitated by international crude market prices is absolutely farcical and unjustifiable.

Elementary arithmetic would prove that if US$147 gives a price of ¢51,000, which then candidate Mills considered to be too high, then US$79 cannot give a higher price of ¢52,000, unless one is using some reverse, twisted logic, Mr. Amoah noted.

“We therefore debunk the assertion that this increase is necessitated by demand-pull factors, linked to the rising world market price of crude, as bogus and a deliberate attempt to throw dust into the eyes of the people of Ghana. This is sheer propaganda and absolute perpetuation of falsehood.

The truth is that Government is only being faced with the reality of its grandiose and deceitful campaign promises and has no option than to pass on cost to Ghanaians”, AFAG stressed.

It would be recalled that during the last New Patriotic Party (NPP) administration, when the world market price of crude climbed to the unprecedented level of US$147 a barrel, at a time when a world food crisis was also generating tension around the world, especially in Africa, the then administration took the very difficult step to freeze the ex-pump price of petrol at ¢51,000 to cushion the people from the effect of the global food crisis as well as the fuel prices.

When the international prices suddenly tumbled to as low as US$44 a barrel, at a time when TOR had already bought inventory for three months' supply of fuel, Government's explanation that it needed to sell refined crude at existing prices for the existing inventory was rubbished by the National Democratic Congress (NDC) and its allies in the CJA.

Under mounting pressure from political pressure groups and other civil society organizations, the government was forced to further reduce the ex-pump price of fuel. Inevitably, this action immediately caused TOR to accumulate significant stock losses, which is part of the now famous “TOR Debt”.

The pressure group said the NDC government has already added GH¢200million debt to the outstanding GH¢1.5 trillion Tema Oil Refinery (TOR), making the total debt stock to GH¢1.205trillion.

AFAG emphasized that “data from the refinery show that the inaction on the part of the government in managing the debt beyond continuous churning out of new figures, is costing TOR in monthly interests, amounting to GH¢20 million (¢200 billion). This translates into some GH¢200 million (¢2 trillion) over the last 10 months.

In other words, government inertia alone has ballooned TOR's liability to Ghana Commercial Bank (GCB) by an additional ¢2 trillion. By even the world's lowest standards, this cannot be said to be a better management of the TOR debt.

The group stated that it is therefore inescapable that though the NPP Government was able to clean up the books of TOR by repackaging and refinancing the debt with bonds, the cumulative effect of the under recoveries during the height of the of the World Market Prices and the stock losses for a three-month inventory, the NPP Government's tax waivers and reductions, interest on TOR overdraft, exchange losses resulting from the depreciation of the cedi is what has now become famously known as the “TOR Debt”.