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14.11.2008 Business & Finance

We must recover huge losses — NPA

By myjoyonline
We must recover huge losses — NPA

The last downward review of petroleum prices is not the actual reflection of the drop in the price of crude oil on the international market, the National Petroleum Authority (NPA) has said.

It explained that the move was purely intended to ensure a recovery from the huge losses that had been incurred over the period when adjustments in the prices were frozen.

Speaking to the media in Accra yesterday, the Chief Executive of the NPA, Mr John D. Attafuah, noted that “the average decrease by our calculations was about 17 per cent but the authority, in consultations with the wholesalers, allowed only an average of 10 per cent reduction in the ex-pump prices to allow for the recovery of some of their losses”.

Analysts and members of the public had challenged the authority to come clean on the review as announced since November 1, 2008 because the percentage reduction in the prices was not a true reflection of what had transpired with respect to the downward prices on the international market.

The NPA boss said as per the arrangement between the NPA and the wholesalers, the recovery per month would be $12 million until the losses incurred had been fully recovered.

Mr Attafuah said the losses incurred since the freeze in May this year stood at $168 million.

He noted that despite the increases in crude oil prices to a record $147 per barrel on July 14, 2008, the motoring public in Ghana continued to buy fuel at prices set on May 3, 2008 when the crude price was $116 per barrel.

“Two very important factors used in the determination of petroleum product prices on the local market are world prices of crude oil and products and the exchange rate between the cedi and the US dollar.

While the prices of crude oil and petroleum products were on the decline on the world market, the dollar, on the other hand, strengthened against the cedi, thereby making the local prices of petroleum products still high, compared to those set on May 3, 2008,” he said, adding, for instance, that “gas oil prices could have reached GH¢6.5 per gallon at the height of the crisis”.

Mr Attafuah also indicated that although the price premium in US dollar per litre was below the May 3, 2008 level from September 1, 2008, “the price premium in Ghana cedi per litre was higher than the May 3, 2008 figure”.

“It was not until October 16, 2008 that the price of premium, 70.850Gp per litre, started going below the May 3 levels of 76.3682Gp per litre,” he added.

Mr Attafuah noted that the “impact of the exchange rate on prices is the same for all the petroleum products”.

He said the Tema Oil Refinery (TOR) and the Bulk Oil Traders were expected to begin the recovery of their losses from November 1, 2008 when the prices were reviewed.

“We either pay it from the national budget or allow the NPA to manage its recovery through the pricing mechanisms,” he said.

Mr Attafuah said the NPA, by its mandate, was expected to protect the interest of both consumers and petroleum service providers.

“While we expect consumers to benefit from the price reductions on the world market, it is also important for us to ensure that petroleum service providers do not suffer unduly,” he said.

Premium petrol, which stood at 118.53Gp per litre is now selling at 106.65Gp, while gas oil (diesel) also sells at 109.85Gp per litre from the previous price of 120Gp.

Kerosene has also been reduced from 135Gp per litre to 102Gp, while premix fuel, the special fuel used in running outboard motors by fishermen at sea, is going for 66.12Gp per litre from 73.48Gp.

Liquefied Petroleum Gas (LPG) has also been reduced from the 100.44Gp per kilogramme to 91.91Gp per kilogramme.

Source; Daily Graphic