29.09.2004 Business & Finance

Fuel Prices To Go Up By February

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The current subsidy being enjoyed by Ghanaians will most likely be over by February next year.

This is in line with the government's programme with the International Monetary Fund (IMF).

Ghana was expected to fully de-regulate the petroleum sector before reaching the HIPC completion point.

But that performance criterion was waived by the IMF upon request by the Ghanaian government.

But the IMF has signaled in one of its reports that the grace period should be over by early next year.

By the 15th of February next year, the current petroleum-pricing regime will be replaced with a new regime where government would no longer take the pricing decision.

This is contained in an IMF report that expects government to absolve itself from fixing prices. The report warned that the government's decision to leave petroleum prices unchanged ahead of the election in December 2004 would create a source of vulnerability for the country's budget.

With the current crude oil price hikes, which are being subsidized locally, any move to leave pricing to the oil marketing companies under the de-regulation policy could “spell doom” for the consumer.

Crude oil has hit the 50 dollar mark and if the price hike is sustained as has happened since the beginning of the year, then there is going to be a big gap between the current price of petroleum products in Ghana and the world price by the time the de-regulation is fully implemented.

Although government has not commented on the likelihood of price hikes after the December polls, the energy minister, Dr Paa Kwesi Nduom has said that the government is committed to the implementation of the de-regulation policy and it will be completed by early next year contrary to what is contained in the IMF report.

This means that the country should be bracing up for another price jump in petroleum prices come next February.

Economists have warned government of the consequences of retaining the local price despite hikes in world price of crude since the beginning of the year.

But just as it happened in 2000, government couldn't go by it own promise to keep to its pricing formulae.

It is however hoped that the government will take a cue from the current development in Nigeria where there have been a number of industrial unrest as a result of the de-regulation policy and the effects of petroleum price jumps on other goods and services as happened last year.

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