23.03.2005 Press Review

Price of gas may be reviewed - President hints

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Accra, March 23, GNA - The Government would reduce the price of liquefied petroleum gas (LPG) if an ongoing assessment reveals that domestic users of the product have reverted to wood fuel, President John Agyekum Kufuor hinted on Wednesday. Answering a question on the possibility of degrading the forest in view of the new price of LPG, President Kufuor said the Government was closely monitoring the situation to balance the preservation of the environment with the realistic pricing of the product. "We will reduce the price when it becomes necessary, but we need time to study the situation," he said.
There is a long-standing energy policy to encourage those who rely on wood for fuel to switch to LPG gas to prevent the degradation of the forest.
However, some analysts have cautioned that the policy risked being undermined following the recent increase of the price of LPG from 3,800 cedis to 5,700 cedis per kilo.
President Kufuor spent a lot of time in both his opening remarks and question time to justify the recent price increases of petroleum products, saying they were necessary for the growth of the economy. A group calling itself the Committee for Joint Action has so far organised two protest marches demanding a reduction in the prices.
President Kufuor, however, explained that the price hikes became necessary and were aimed to serve as corrective measures towards full cost recovery and to enable the Government to raise enough taxes to cut back on the over-dependence on donor support for development.
It is also to bring Ghana's pricing in line with what obtains in the West Africa Sub-Region to reduce smuggling of the products. With comparative figures on taxes and prices of petroleum products in the neighbouring countries as well as their per capita income levels, President Kufuor proved that Ghana's prices were relatively cheaper. Ghana has the lowest petroleum tax in the Sub-Region, he noted. A comparison of ex-pump price of 30,000 cedis per gallon of premium petrol to those in the Sub-Region indicated that they were sold at levels between 34,000 cedis and 48,000 cedis.
President Kufuor stressed: "Though difficult, this step (price hike) took full cognisance of the inherent hardships to Ghanaians and I must assure you that it is more as a result of the Government's sensitivity to these hardships that Government fixed the increases at the levels they are now.
"Indeed, the sensitivity analysis was done before the introduction of the policy to indicate the levels where the needed cushions to the society could be achieved."
The President's welcoming statement also focused on the on-going deregulation exercise of the petroleum sector said the sector had posed many challenges to successive governments over the years but his administration had commenced the implementation of the programme. The government had spent two trillion cedis to bridge the level of shortfall to ensure that the nation continued to have its crude oil supplies.
President Kufuor said: "Last year, as the price of crude oil continued to rise higher and higher on the world market, government had to dig deeper and deeper into the national reserve."
He, therefore, argued for private sector participation in the petroleum sector saying, "if the private sector had been the main importer of crude oil, government would have been spared the ordeal". Energy Minister Professor Mike Ocquaye said in Cote d'Ivoire, the tax on a litre of premium in dollar terms was 0.43; Senegal, 0.45; Burkina Faso, 0.41; Mali, 0.3; Togo, 0.2, Benin 0.2 whereas Ghana's was 0.08.

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