Government would protect consumers of petroleum products from high prices when deregulation of the sector becomes fully operational, Professor Mike Ocquaye, and Minister for Energy said yesterday.
Addressing the opening session of a two-day international conference on deregulation, Prof Ocquaye said appropriate regulating mechanisms to be enforced by the National Petroleum Agency would ensure that consumers did not suffer the payment of unduly high prices.
Deregulation is expected to allow private sector operators to import crude oil and to ensure that prices of the product are market determined. Thus the government will no longer be involved in the determination of prices.
But Prof Ocquaye said Parliament would still continue to fix levy and taxes on the products and these could be used to leverage any hike in price that could affect products such as kerosene and premix fuel among others. The two-day conference being organised by the Business and Financial Times and the Ministries of Finance and Economic Planning and Energy seeks to examine the impact of deregulation of Ghana's Petroleum downstream sector on the economy.
Prof. Ocquaye said TOR would continue to import and process petroleum and expressed the hope that the deregulation exercise would place it in a better position to compete. He asked Ghanaians not to view the deregulation of the sector as an imposition from donors but as a collaborative effort to introduce efficiency into the pricing mechanism and to free resources currently being used as subsidies into social and economic development.
Government spent a total of 1.7 billion dollars as subsidy on petroleum products last year. "We must put our acts together as a country when government pursues economic diplomacy to get resources from donors."
Dr Ernest Addison, Head of Research Department of the Bank of Ghana said oil imports were the main reason for current account deficits. Oil imports last year amounted to 775 million dollars, representing 20 per cent of all imports in to the country. He said the current petroleum pricing formula was inefficient and hoped that a new formula that allowed oil marketing companies to bid competitively could guarantee consumer satisfaction.
Besides deregulation would allow other Oil Marketing Companies to compete in the financial market for funds and break the current monopoly of the Ghana Commercial Bank as well as ensure efficiency in the foreign exchange Interbank market.
Dr Samuel Nii Ashong, Acting Minister of State at the Ministry of Finance said although there would be one time jump in prices, its impact would be minimised through appropriate monetary and fiscal policies. However, he said, these cost implications might mitigate the overall growth rate in 2005.