Fuel Price To Shoot Up Again?

The Enquirer's intelligence has picked up that the World Bank and the International Monetary Fund (IMF) are quietly pressurizing government to increase the prices of fuel to reflect current prices on the international market.

Last week, officials of the World Bank and IMF, it was gathered, visited the National Petroleum Authority (NPA) to check their books, and verify as to whether the current ex-pump price of fuel in Ghana, matches up to the world market prices.

The two Bretton Woods institution argued, and was confirmed by The Enquirer's sources at the NPA, that the current prices announced last month, were fixed at around US$55.00 per barrel, indicating that Ghana is still selling fuel at $5 lower than the international market price which is currently $60. Government, the IMF and the World Bank suspect, is secretly subsidizing the extra $5 difference, a situation which stands to violate a technical memorandum of understanding signed between government and the IMF. In the technical memorandum of understanding, between Ghana and the IMF, the government promised to follow 'through on its long-standing commitment to withdraw from administering petroleum prices' by "ensuring full recovery of all costs and taxes and ending the need for budget subsidies".

The minister for finance and economic planning, Honourable Kwadwo Baah-Wiredu and Mr. Paul Acquah of the Bank of Ghana, who signed the agreement in May this year, stated that the government has a mechanism for the petroleum producing pricing which will reflect world prices. It would be recalled that the NPA in announcing the current prices would be subjected to quarterly review. It is therefore expected that the Authority may announce the next adjustments in fuel prices by November this year. Until then, the government is subsidizing the ex-pump prices of fuel, contrary to its agreement with the Bretton Woods. The new pricing mechanism, which the institutions are calling on government to enforce to the letter, is specified through the use of import-party ex-refinery prices, based on competitive tenders from private-sector participants for both refined products and crude imports. The agreement further stated that the distribution margins and all other taxes and levies are to be added to the ex-refinery price to determine retail prices." After agreeing to this, the government went ahead with the implementation to satisfy its side of the agreement. Meanwhile the World Bank has stated that it delayed in releasing a US$125 million equivalent credit facility to Ghana from the International Development Association (IDA) program, as a result of government's delay in implementing the deregulation programme and added that it s a breach of government's agreement with the IMF.

Government has agreed in principle to allow the NPA which has been formed under the deregulation of the petroleum downstream sector programme to determine fuel prices to reflect changes on the world market. It is in this light that the World Bank is insisting that prices are increased.

Signing the agreement providing the US$123.50 million under the Multi Donor Budget Support (MDBS) programme, the World Bank representative in Ghana, Mr. Mats Kaleson, said among other things that it is as a result of government's prudent fiscal discipline and commitment towards the implementation of the petroleum deregulation programme, that the board approved the facility. The institutions take seriously government's policy on the deregulation of the petroleum sector and keep track of developments with regards to that policy.