The Economy Is In Danger …The True Message On The State Of The Nation By The Minority In Parliament

Continued  from yesterday issue
It is not surprising therefore that investors have lost interest in signing new power purchase agreements with ECG, since they are not financially strong to pay for energy purchased. To date, all six Power Purchasing Agreements signed by ECG have not materialized.

We need to save the energy sector of this country, otherwise, the much talked about middle income status will continue to be a mirage.

 
ELECTRICITY GENERATION
Indeed when the NDC promised to increased electricity generation capacity to at least 5000 megawatts in the medium term, the truth is that they have only added two megawatts.

The other hydro projects which were receiving cabinet consideration including the Ankobra, Tano, Pra and Oti under the Kufuor government have all moved to the backburner. It is no wonder then that the nation has over the past one and-a-half years been experiencing serious power outages which is resulting in the destruction of household appliances, buildings and markets. Industry has lost out in a very significant proportion. Above all, the 'dumso, dumso' phenomenon has exacted a severe toll on human life.

On Thursday March 15, 2012, an announcement was made to the nation that the load shedding exercise was over because 'all VRA plants have been restructured to run on both gas and crude oil'. The 'dumso' continued after that date (ref. Daily Graphic, March 16, 2012). A second announcement was made in June by the Minister of Energy that the outages would end on by the close of June, 2012. It continued. President John Mahama added his voice on his campaign trail that power outage would be a thing of the past by mid December 2012. It continued. Today. VRA insists that the 'dumso, dumso' would finally terminate in April, the President says we should hold on till ending June, 2013.  What and who do we believe?

 
FUEL PRICE INCREASE
The recent price increase in petroleum products in the country gives a lie to the hypocrisy of the NDC.  From pledging to 'drastically' reduce the prices of petroleum prices, we now continue to see a spiraling of those same prices as well as utility rates.  The untold hardships that this increase has brought unto Ghanaians has raised hue and cry in every corner of the country, including even the NDC - sympathetic CJA leadership themselves.

 
At the beginning of 2009, the then Mills - Mahama government pointed in the direction of the highly disputed TOR Debt (which level or magnitude they themselves could not ascertain) as the major reason for the frequent shortages of petroleum products and so sought to use that to justify the need to increase petroleum prices.  The one increase came after another even with the so-called 'HEDGING OF PRICING' of our expected future petroleum purchases to reduce these increases.

 
Then, after illegally manipulating the Petroleum Pricing formula and surreptitiously inserting in it, an Ex-Refinery Differential Levy which the NDC could not defend before the law court, the NPA was shamefully caught and then prosecuted before an Accra High Court and ordered to refund what it had illegally collected.  The brash NDC has exhibited defiance of the legal system by refusing to refund the GH¢800 million ordered by the court.

 
Today, the NDC is citing smuggling as one of the major reasons for the need to remove subsidies.  The NDC further states that more funds are needed for development, particularly, at the rural level, like schools and clinics.  But is that not why the NPP Administration under President Kufuor introduced the Social Mitigation Levy and delivered this social infrastructure?

 
What has happened to the nationwide stakeholder consultation and road shows which the NPP/Kufuor Administration used to introduce many major policy decisions such as the Petroleum Pricing Formula?  Why was the removal of the so-called subsidy from the formula not subjected to such nationwide debates for the people to choose our priorities?

 
Today, there is muted discussion in the corridors of power relating to privatization of TOR.  At a time when we have discovered oil in commercial quantities, the NDC government suspended the NPP administration's planned TOR expansion project and then later halted the entire operation of TOR, reversing the lifting of crude oil back to Ghana National Petroleum Corporation (GNPC), a practice that crippled TOR in a previous NDC government and is now surely doing the same.

 
The shortage of LPG arising from TOR's lack of refining crude may appear to be a side issue, but the bigger matter lies in the four-year well calculated NDC scheme to grant finished products lifting permits to the NDC Oil Marketing Companies (OMCs) and Bulk Distribution Cos. (BDC).  The nation must know which high profile personalities have made such huge super profitsfrom the lifting of finished petroleum products that they are now able to buy a strategic national asset like TOR so that they only can now refine Ghana's crude oil.

In conclusion, we cannot but have to say that the NDC again has exhibited not only bad faith and incompetence in the management of the petroleum sector and the associated price adjustment, but also been scheming to sell a vital national asset such as TOR to its business associates.

 
The NPP shall stand in the interest of the people to see to it that clarity and transparency prevails in TORs Corporate Management.

 
THE PEOPLE MUST KNOW THE FORMULA
Ghanaians need to be given the opportunity to understand clearly the various elements, levies and margins that make up the petroleum price build up.  It is only at this point that the current price increase may sound meaningful to Ghanaians.  Since the increase in the petroleum price affects every facet of our economic activity, it is very necessary that prudent and objective policies are put in place to promote rapid economic growth for the country.

 
Unfortunately, the NDC seem to be clearly toeing a different direction with the sole aim of demobilizing the refinery which should rather be the pivot for the take-off of the downstream expansion of the petroleum industry.  The deregulation of the downstream sector especially for the importation of finished products by Bulk Distribution Companies (BDC) who have no facilities or storage depots is one of the worst decisions taken to cripple TOR.  This must stop.  TOR should be encouraged to continue its expansion programme started in 2000, (i.e. increase storage capacity, increase internal power generation, fire protection / prevention upgrade, revamp of API Separator for treatment of effluent water etc).  All these programmes were intended to position TOR to build an additional refinery with a capacity of 120 Barrel per Stream Dry (BPSD).  How can TOR pay for all these investments/expansion projects if it is not recapitalized?

Today the NDC is distributing BPC licenses to their business associates to dominate the petroleum import business and thereby deepen the woes of TOR. We are reliably informed that the government will be rewarding its business associates with 10 more BDC licenses this year and we are interested in following the process based on our knowledge of the legal requirements for such licenses.

 
PRICE BUILD - UP
Below is a full outline the petroleum price build-up as of 1 st January, 2013. A critical examination of it shows that there are no less than ten different levies/ charges heaped on the prices of all the petroleum products.

 
A critical view shows that the Ghanaian pays fully for every product as at now.  The TOR debt Recovery levy, the Road fund, Exploration, cross subsidy levy, Primary Distribution Margin, Fuel Marking Margin, Distribution Compensation Margin, etc, are all revenues coming into the government without any tangible explanation of actual use of these monies for the understanding of the people of Ghana.  Where is the drastic reduction of fuel prices promised by the NDC to the people of Ghana which was even made before the discovery oil was announced by President J. A. Kufuor?

 
PETROLEUM PRODUCTS PRICE BUILD-UP, EFFECTIVE JANUARY 1, 2013

PRICES IN GHANA PESEWAS
PREMIUM KEROSENE (DOMESTIC) KEROSENE (MINES/INDUSTRIAL) GAS OIL MGO LOCAL RFO LPG PREMIX UNIFIED

Ex Refinery Price 124.4000 62.1874 169.2649 134.6387 135.0542 77.9643 120.9823 35.5608 129.5700

Excise Duty 2.7800 1.0375 1.0375 1.8000 0.2945 3.2094 0.7245 2.7800

Tor Debt Recovery Levy 8.0000 8.0000 3.0000 4.0000 5.0000 8.0000

Road Fund 6.0000 6.0000 6.0000
Energy Fund 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500

Exploration 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000

Cross-Subsidy Levy 5.0000 -4.8449 -4.8449 -2.6987 -6.5587 -1.3937 -18.4042 -0.3608 5.0000

Primary Distribution Margin 2.5000 2.5000 2.5000 2.5000

BOST Margin 3.0000 3.0000 3.0000 3.0000

Fuel Marking Margin 1.0000 1.0000 1.0000 1.0000 1.0000

Ex-Depot 152.8300 65.0390 172.1075 154.3900 133.2200 83.9300 108.3027 36.3000

UPPF 5.3000 6.3000 6.3000 5.3000 5.3000 6.3000 5.3000

Marketers Margin 7.1000 7.1000 7.1000 7.1000 7.1000 5.3418 6.8000

Dealers (Retailers /Operators) Margin 5.5700 5.5700 5.5700 5.5700 5.5700 4.1801 5.5700

LPG Filling Plant/Premium/MGO local Admin. Costs 0.3000 4.7753 0.3000

Distribution Compensation Margin 7.0000 1.0000

Indicative Maximum Price (Ex-Pump Price) 170.8000 91.0000 191.0775 172.3660 151.4900 129.9000 54.2700

 
 
All Prices in Ghana Pesewas per Litre except LPG in Gp/Kg EXPORT PRICES OF PETROLEUM PRODUCTS - EFFECTIVE JANUARY 1, 2013

Us Cents per Litre
ATK MARINE GAS OIL / RIG GAS OIL (MINES)
Ex-refinery price 117.5800 108.4700 108.4700
Export duty 2.0000 2.0000
Total 119.5800 110.4700 108.4700
 
Besides the ex-refinery price in US Cents, all other components of the Price Build-Up for Gas Oil (i.e. Taxes/levies and margins excluding the UPPF margin) shall be applicable in Ghana Pesewas.

 
THE RECENT FUEL PRICE INCREASE
Reasons for the recent fuel increase by NDC is attributed world market price of crude oil which currently stands between $111 to $116 per barrel as at January, 2013. The exchange rate of the dollar to the cedi was c 1.1 to $1.0 in 2009. Today it is almost c 1.98 to $1.0 a depreciation of nearly 90%. So, one would ask wherein stands the talk of the stability of the cedi by the NDC? The actual increases in fuel price from c 1.70 per liter or c 7.65 per gallon to  c2.04 per liter or c 9.22 per gallon for super and in the case of diesel from c1.72 per liter or c 9.31 per gallon shows between 20.5% to 50% in the various range of products.

 
It is clear that the roll-over effect in all aspects of the economy is going to astronomically affect the living conditions particularly the poor.

 
SUBSIDIES
Government has said that the previous administration subsidized fuel and left huge debt.  We are told that since this government assumed office there have been subsidies.  How much has been the quantum of subsides since Jan 2009 and in particular since Nov 2011 when we had the last increment?

A look at the petroleum price build up shows that consumers are paying the full price of petroleum products. The only subsidy in the buildup is 'cross subsidy'  which is funded by consumers. In this regard we challenge the government to come clean on the subsidy matter. How did they arrive at the subsidy when we are paying the import parity price of petroleum? Is the subsidy against the import parity price or the exchange rate effect which are the major factors  affecting the price build up. What we suspect is that the subsidy is an accumulation of costs by the importing companies which cannot find their way into the price build up and which the government want to justify to make payment to its business associates. In Nigeria this trend led to a high powered investigation which revealed a mafia behind this practice and this is what is happening in Ghana now.

We therefore call for a open investigation into the import issue.

 
TOR EXPANSION
We think that the need to expand TOR and recapitalize it is not only appropriate but urgent.  The abandoning of the NPP's programme has led to Ghana's inability to refine our own crude oil (a sweet and light crude).  Our refinery would have also served as a tolling refinery for Nigeria's crude and in the near future crude oil from Ivory Coast, Liberia and Sierra Leon when we start oil production.  We cannot continue to deny work to the workers while at the same time paying to keep the refinery in shape,even though we have rendered same redundant.

 
K. EMPLOYMENT SITUATION
The right to work, the employment or unemployment situation in the country is another important matter which must engage all patriotic Ghanaians.  The NDC came on a platform to use state machinery and resources to create jobs for the people, particularly the youth: the NDC's strategic objective as declared in their 2008 manifesto (was) to provide every Ghanaian with a job from which they can earn their livelihoods (see page 60 of 2008 manifesto).

It is worth noting that when the propagandists of their Ministry of misinformation had stated mid-term into the Mills administration that the Government had created 1.5 million jobs their own budget of 2011and 2012 indicated a job creation of 120,000.  The reality in respect of this far fewer number is even that they had, through the aggression of their foot soldiers,removed many employees especially those in school feeding, operators at toilets, lorry parks, toll booths and markets whom they considered as sympathetic to the NPP and substituted persons with loyalty to NDC.  The unemployment situation is far worse in 2012 & 2013 than it was in 2008.  It is no wonder two substantive ministers in the Mills administration indicated in parliament that they did not make the statement of 1.5 million job creation and that we should direct the question at the person who made that categorical statement.

The right to work according to Article 24(1) is a fundamental human right and whilst we acknowledge that as a nation we are very far away from affording this right to every Ghanaian, it is nonetheless hugely important to always direct attention and effort to address this critical issue.

In pursuit of the resurrection of Nkrumah's 'Work and Happiness' slogan the NDC in 2008 promised to initiate and launch an Employment Policy that would seek to reduce unemployment to the barest minimum.  Unemployment has skyrocketed in particular since there were no net new employment in conformity with the conditionalities of the IMF and World Bank. The NDC promised to:

Launch a major housing and public works schemeinvolving urban roads, drainage construction and environmental sanitation.  The much hyped 'major housing project, STX was a major flop.  The nation is yet to be told how much has gone into it, in the face of conflicting accounts by various ministers who have occupied that ministry.  The President himself led the nation into STX imbroglio.  Perhaps he may set up a sole-commissioner to unravel the mystery.

Design programmes to provide unemployed graduates with entrepreneurial skills and develop a new framework for cooperative development.  Not only was there no such programme, for the first time in the nation's history we now have an Association of Unemployed Graduates.

Develop and implement the Rural and Urban Entrepreneur and Artisan Project (RUEAP), which would seek to empower and realize the full potential of artisans.  No such project has been witnessed in any urban setting even though the urbanities are the domiciles of artisans.

In the meantime, afforestation and the scheme for bamboo and cane farming begun by the NPP administration have either collapsed or suffered stunted growth.

 
L. DECENTRALISATION AND LOCAL GOVERNANCE
In the year 2012, the NDC Government acting against good counsel and laid down procedure forcibly brought into being forty six (46) new Districts, some of whichDAs are 'hanging' up to date. Even though provisions were made in the 2012 budget and the 2012 DACF Formula to avail One million Ghana Cedis (GH¢1,000,000) as seed money to each of the new District Assemblies, no payment has been effected up to date. The question is where is the money? The truth of the matter is that the Government rushed through the creation of the Districts to compel the Electoral Commission to create Constituencies for the 2012 elections.

The reality is that very little is happening in the districts because of delayed transfers of monies into the DACF account to enable the Administrator to pay the District Assemblies as per the approved formula.

Every District Assembly in the country is bleeding as a result and contractors and other service providers continue to chase them for payment which is not forthcoming. The vicious cycle into which the NDC has plunged the DACF and other statutory funds cannot be allowed to continue.

The Kufuor-led administration increased the DACF from 5% to 7.5% and also instituted the District Development Facility (DDF) and the Functional Organizational Assessment Tool (FOAT) which the District Assemblies have tremendously benefited from because it brought on board another stream of financial inflow into the District Assemblies. Over the past years that the NDC has been in government, it has only paid lip- service to improving the finances of the District Assemblies.

To be continue