Politics Of Crude Oil – NDC Falls On Its Own Dagger

Kwesi Biney

SOMETIMES IT becomes difficult for one to publicly say that 'I am a politician' in Ghana. This is because politicians are gradually eroding the confidence the electorate have reposed in them.

We have not been very honest with the citizenry when it comes to the real issues that confront the nation.

Governing a nation is a very arduous task in the face of conflicting and varied demands from the citizenry, which in themselves are legitimate on those in whose hands the destiny of the citizenry, both present and the future have been placed.

It is not easy, I admit, for a government to postpone the needs of its citizens today for a better tomorrow, but it is more difficult to make tomorrow's needs attainable when we embark on reckless policies today based on populist and moribund political ideology which is shortsighted and plays to the gallery, rather than long term policies which yield results for the future.

All governments throughout our history have been guilty of this, particularly the first Republic, which created the impression in the minds of Ghanaians that the government can provide everything for free to its citizenry.

The governments which followed either continued with it or tackled the problem half-heartedly. One commodity which has dealt a serious blow to our economy and social lives has been crude oil, out of which we generate most of the petroleum products we need to lubricate the machinery of everyday activity.

Most governments, apart from the Nkrumah government who saw the effects of petroleum pricing on our economy, commented on it and yet did virtually nothing to address it for the overall benefit of our nation. The Nkrumah government did not see any problem with oil at the time.

Being the freebie people that we are, we continued to burn fuel at cheap prices relative to our neighbours with careless abandon, and turned round to complain when other necessities could not be provided because one commodity had consumed all our resources as it were.

Let us go through the following statements on oil or petroleum products by various governments. It is amazing to note that in the 1970-71 Budget Statement, no import duties were put on crude oil imports even when kako imports had been slapped with import taxes.

While the discovery of off-shore oil find had been announced, the Budget Statement had this to say; 'For the time being, we cannot count on oil revenues in dealing with either our balance of payments or our budgetary problems'. Another regime also had this to say on petroleum products.

'Developments since the last quarter of 1973 have tended to slow down the tempo at which the economy had been responding favourably to Government economic policies since the beginning of 1972. The main causes for these adverse developments were:

(a) the quadrupling of crude oil prices in the last quarter of 1973 and the built-in rigidity in the economy of Ghana tending to impede an appreciable reduction in her consumption of oil;------------ source: Budget Statement for Fiscal Year 1975-76.

The Five Year Development Plan of 1975\76-1979\80 also had this to say on crude oil; '---- prominent among the factors responsible for the sharp deterioration in the external payments position were high increases in the prices of imports, particularly oil, and the breakdown in the import license system'.  

When Dr. Hilla Limann assumed office, he was confronted with the problem of crude oil prices and its effect on the economy. In its first Budget Statement to Parliament on 20th December 1979, Dr. Amon Nikoi had this to say;

'The last time Government adjusted the ex-pump prices of petroleum products was in September 1978, when the world price of crude oil rose to about $14.10 or ¢38.78 per barrel. Since then, there has not been any adjustment in ex-pump prices in spite of the large increases in the world price of crude oil'.

He went on to say, 'It is estimated that this subsidy amounts to as much as ¢40million a month. At this level of subsidy, Government can hardly obtain sufficient funds for the provision of essential services'.

It is instructive to note that the total development budget for that fiscal year was ¢900million, when subsidy on oil was ¢480million per year.

The PNP government in its 1981-82 Budget Statement re-echoed the negative effect crude oil prices were having on the economy of Ghana when Prof. George Benneh said, 'The rising price of crude oil petroleum in recent years has forced Government to shift more and more foreign resources into the importation of crude oil with the result that in the face of stagnating export earnings, the basis for the rising of import duties  has been seriously eroded since crude oil imports are exempted from import duties. In spite of this, the excise duty on petroleum products has remained unchanged since the 1978-79 financial year'.

In the first Budget of the National Democratic Congress (NDC) in 1994, Dr. Kwesi Botchwey had this to say on petroleum products, 'an amount of ¢216.8billion has been projected as petroleum tax in 1994.

This is the same tax yield as was projected in 1993. To obtain this revenue, it is proposed to increase petroleum prices by an average of 18% and to remove the subsidy on premix. However, the increase in kerosene will only be 10%.

It would be necessary to ensure throughout the year that ex-pump prices fully cover the cost of importing, processing and distributing petroleum products'.

In 1996, Mr. Kwame Peprah, in presenting the Budget Statement to Parliament, also had this to say, 'Mr. Speaker, we have over the past fifteen years moved from a situation where petroleum product prices were subsidized by Government to a situation where petroleum taxation is a major revenue source for Government. Some might say, why not reduce the Government tax so as to avoid increases in prices.

At the same time, throughout the nation, there is a desperate quest for development for new roads, for improved sanitation, for better educational and health facilities. Without taxes such as the one on petroleum, all these legitimate aspirations would be frustrated'.

One of the most amazing reasons ever given for the increase in the pricing of petroleum products in this country was that contained in the PNDC Budget Statement of 1993, just 48 hours to the ushering in of the 4th Republic.

He stated in the Budget thus: 'Less than 20% of our national work-force is on the government payroll, and yet this 20% has demanded and is currently receiving a disproportionate large portion of revenue generated by all of us, farmers, fishermen, private enterprise, etc'.

He went on: 'the President-elect, in his just ended Farmers' Day speech, expressed his dismay at the injustice of this inevitable step.  

'It means that all of us, including more than 80% of our working people who are either self-employed or who are employees of private enterprises, are going to have to subsidize, through the direct and indirect costs of increased petroleum products--------

'So government revenue will have to be increased in order to pay the present wage-bill, and the only immediate way for this to be done is to increase the price of petroleum products'.

The Kufuor administration also justified the need to increase the prices of petroleum products to save this country, and it went on and on until the Better Ghana people started their Wahala demonstrations and all to cow the Kufuor administration into submission in an election year.

The promise to reduce petroleum products drastically by Prof. Atta-Mills, who dishonestly played on the emotions of the people and got elected on untruths told in their modern forms, has now come to haunt him.  

I have gone down this memory lane to let all of us as Ghanaians know that we can not cut our noses and spite our faces.

As politicians, we should be honest to our people and fashion realistic policies that might hurt today but be beneficial tomorrow for the good of generations unborn. We engage in political gimmicks which benefit us politically today and send us into an abyss of economic destruction tomorrow. 

They will always come back to haunt us. I am wondering whether Prof. Atta-Mills really gets a good night's sleep with the belief that he has been very honest to himself and this nation in the area of his policy on petroleum products and their pricing under his regime, since he promised us honesty. Se edua konkonsa ebro,a,ofifir won nan ho.