Petrol Price Hike Not Justified - Legon Don
A senior lecturer at the economics department of the University of Ghana Legon, Dr. Augustine Gockel has noted that if Tema Oil Refinery (TOR) has the capacity to refine crude oil at the price that is the cheapest in the sub region and still manages to recover full cost after all government taxes had been added, then there is no justification to increase the price of petrol for fear that the product would be smuggled.
According to him, the argument being advanced by some commentators that our petrol was being smuggled outside the country because of its cheaper price, to justify the recent price hike did not have any economic sense because the more the commodity was smuggled, the more the consuming countries would be contributing to the growth of our economy in the form of taxes if TOR could produce at cheaper price and still manage to recover full cost.
Dr. Gockel was speaking at a one-day seminar organized by the Ghana Journalists Association (GJA) for its members in the western region on the 2005 budget.
The programme, which was sponsored by the United States Agency for International Development (USAID) and KAB Governance Consult (KGC), was also meant to sharpen the skills of the reporters in finance and economic reportage.
The chief executive officer of the KAB governance Consult, Mr. Kwasi Afriyie Badu, the general secretary of the GJA, Mr. Bright Kwami Blewu and his treasurer, Yaa Oforiwaa Acquah attended the programme, the second to be organized for the Western Region press corps.
The first, which was sponsored by the above sponsors, was organized at the Valley Beach Hotel in Takoradi late last year.
Dr. Gockel told the journalists that if people were comparing the prices of petroleum products in Ghana to other neighboring countries, then they must also muster courage and compare the price to that of USA too.
The lecturer would however not commit himself as to whether the government was justified in increasing the price to the current ¢30,000 per gallon of petrol or not.
According to him, the government had not made public the formula it used to calculate before settling on the current price, so he was not in the position to make any comment on the new price.
Dr. Gockel would as well not condemn or commend the ongoing demonstration against the fuel price hike because he did not know how they also arrived at the figure they were quoting.
He was however of the view that the militant approach the leaders of the demonstration had adopted was not the best and that they should have first used dialogue to resolve the issue instead of giving the government an ultimatum.
Touching on the performance of the economy, Dr. Gockel said last year, our Gross Domestic Product (GDP) grew by 5.8%, thus exceeding the projected growth of 5.2%. Interest rates also generally declined.
He noted that since the year 2000, all our GDP growth targets were met. He was however quick to add that within the period under review, the targets set were bellow 5% as against over 5% that were being set previously.
The economic lecturer said also that among the three main sectors of the GDP, only the agricultural sector saw phenomenal growth last year and even this occurred mainly in the cocoa sub-sector, which recorded a growth of almost 30%.
The rest, which he listed as crops, fisheries among others, did not perform well.
He said it was based on this poor performance that Cape Coast and its environs had been declared as a poverty endemic area because fishing which is their main occupation did not see much growth as recorded in the cocoa sub sector.
On industry, he said the growth occurred in the construction sector because of the numerous construction works going on in the country and the employment it had generated.
He was of the view that though the economy generally achieved some gains, it still remains fragile because Ghana does not determine prices of commodities like cocoa on the international market.
Augustine Gockel though admitted that interest rates were generally stable and he would not accept the use of the base rate that is a bit low nowadays to justify this argument because the base rate was not the operational rate which the banks used when giving out loans to individuals.