Ghanaians Reject Fuel Price Hikes

A random survey conducted by the Business Chronicle among a cross-section of Ghanaians in Accra has revealed that majority of Ghanaians are not in favour of fuel price increases as they think would result in more hardships than benefits.

Speaking to the Business Chronicle, Mr. Frank Azu, he said 'already our disposable income is very low and with further increase in Fuel prices, our life existence would be threatened'.

This is one of the many comments about the impending fuel price upward adjustments.

A section of the media reported last week that the prices of petroleum would hit the upward trend by Thursday and the President may make the announcement on Tuesday in a press briefing. Of about 50 people the paper spoke to, 70% said they do not want to see an increase in fuel prices citing the higher cost of living and diminished purchasing power as the what would pertains after that. According to the Statesman report, 'by Thursday morning a decision had been taken to increase the price of petroleum products.' Premium petrol was to go up by 3.5 percent to ¢32,100 per gallon whilst Diesel was to go up from ¢26,400 per gallon by about 1.7%.

According to Statesman, while the decision was seen as irrevocable, the debate was over the meagerness of quantum increase. The report stated that the National Petroleum Authority postponed the fuel increase after lack of consensus on the percentage increase. Sources in the National Petroleum Authority say the Authority has postponed its planned announcement of increases in fuel prices to a later date. Meanwhile, the ministry of energy and its deputy minister, Mr. TK Hammond, minister of information, Mr. Dan Botwe and the National Petroleum Authority are all tight lipped about the report of the increases in fuel prices. It is believed that the publication in the Statesman and the publishing of crude oil prices on the front pages of pro-government newspapers such as The Daily Graphic and the Daily Guide were all to test the pulse of Ghanaians about the impending fuel price increases. Indeed, the Governor of the Bank of Ghana, Dr. Paul Acquah hinted of a possible fuel price increases when he announced the prime rate some few weeks ago. He said " the surge in the oil prices if sustained, would a significant source of downside risk to the external payments, requiring flexibility in pricing and other efficiency measures to reinforces economic resilience."

However, from the economic point of view of any fuel price increases, financial experts believe that an increase would lead to the country missing the target of single digit inflation by the end of the year. Although the price of fuel form a portion of factors that determines the rate of inflation, most times when fuel prices had gone up, inflation responds respectively to it. Another school of thought have it that with crude oil hitting over $60 a barrel, Ghanaians must be prepared to tighten their belt to pay more as money that should have been used for capital expenditures would be used to subsidize fuel price which is unproductive. The school thought that if the NPA had gone strictly according the petroleum pricing formula according to the current world market price of crude oil, prices would have gone even higher than the proposed increases.

The new petroleum price build up released last month showed an increase in the ex-refinery price of petrol from ¢13,645.17 to ¢14,086.62 per gallon.