body-container-line-1
02.06.2009 Business & Finance

Confusion over fuel price

02.06.2009 LISTEN
By Daily Guide

Confusion has shrouded the expected price adjustment for petrol in the country, as the National Petroleum Authority (NPA) appears unable to announce the new increase.

An expected meeting over the increase did not come on as announced earlier by the Public Relations Manager of the NPA, Steve Larbi, who pointed at yesterday as the new date for the meeting to precede the adjustment.

DAILY GUIDE has learnt that the whole exercise has been entangled in politics, with government finding it difficult to come to terms with the reality of price adjustments, having sneered at such economic developments when they were in opposition.

While the oil marketing companies are feeling the pinch of maintaining the old prices in the face of a rising crude oil price on the world market and therefore seek an accompanying adjustment, government on the other hand is scared of tucking its tail between its hind legs like a mongrel in the face of the economic reality on the ground.

Sources say the increase which would be the second since the National Democratic Congress (NDC) assumed governance in January this year, may be in the region of 10-20 percent, meaning the price change would be significant.

This paper gathers that the new prices by NPA would see diesel going up by 10 percent while petrol goes up by a margin of between 15 and 20 percent.

A gallon of petrol which is going for GH¢3.80 may sell beyond GH¢4.10 whilst diesel which sells around GH¢4.00 per gallon may also go beyond GH¢4.20. LPG will however continue to enjoy some cushioning as the government is determined to encourage its usage for domestic purposes as a matter of policy.

President John Evans Atta Mills announced a new Board for the NPA which is yet to be inaugurated a few weeks ago, but the increment in petroleum prices has become necessary because of the rising price of crude oil on the world market and would have to go ahead, the absence of the Board notwithstanding.

Though the government increased fuel prices in March after the dissolution of the Board in February, some analysts question whether it is legally right for the NPA to announce new fuel prices without the Board's approval.  

The sudden increase of petroleum prices is at variance with the electoral promise of President Mills who had indicated that state intervention was necessary, especially in the face of economic hardships. 

And therefore, the new twist appears to suggest that he had played a fast one on Ghanaians, by throwing dust into the eyes of his compatriots to gain power.

Oil prices had been rising since April this year, hitting a six-month high of $66 per barrel on Friday, buoyed by falling US stockpiles, amid signs the US economy is not shrinking as fast as people thought. Whilst US light crude was $66.24 a barrel, Brent crude was $64.8.

Analysts say the commodity may escalate further if the global crisis tends to slow.

In a related development, former Energy Minister, Professor Mike Oquaye, says the NDC government appears to be amending its position on subsidizing fuel prices now that it has assumed the reins of power.

By Charles Nixon Yeboah

body-container-line