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13.12.2005 General News

Petroleum taxes are lower now than in NDC era - Ocquaye

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Accra, Dec. 13, GNA - Government on Tuesday said the current level of petroleum taxes was the lowest in the history of the petroleum taxes regime, though that it was important revenue source for financing development projects.

Giving a breakdown when he took his turn at this week's Meet-The-Press, Professor Mike Ocquaye, Minister of Energy, said from March 29, 1991 to February 2, 1996 the percentage of taxes in the pump price was between 45.5 per cent and 57.7 per cent. However, from February 23, 2001 through December 12, 2005 the taxes have ranged from 11.5 per cent to 42.8 per cent. "This shows that the tax component of petrol prices during the NPP administration are lower than was during the NDC era."

Quoting Mr Kwame Peprah, Former Finance Minister in the previous administration, Prof Ocquaye said the NDC in defending the principle in support of the budget said in Parliament that without appropriate petroleum taxes, the laudable aims of the Government in providing good education, roads, hospital, among other things for the people could not be realized. He noted that the Government was working strenuously to make petroleum taxes less burdensome, but with recent sharp increases in global crude oil prices, it had become rather daunting.

Crude oil prices averaged 10.61 dollars per barrel in 1978, 19.33 dollars in 1991, 24.46 dollars in 2001 and 54.35 dollars in 2005. "Between July and October, prices peaked above 57 dollars per barrel which have caused petrol prices at the pump to increase dramatically." He said a levy such as that for exploration, which was increased from three cedis to 10 cedis, helped the Ghana National Petroleum Corporation to accelerate its exploration activities resulting in an increase in the number of negotiations and petroleum agreements. Prof. Ocquaye said the margin for Bulk Oil Storage and Transport (BOST) was responsible for increased expansion of BOST and storage depots.

The Energy Minister said the Tema Oil Refinery for instance, also made improvements to its facilities to optimise output. "TOR has done rather well in these short weeks and months and is set to break new grounds soon." He said the Residual Fluid Catalytic Cracker (RFCC) was to increase its output to the maximum and was able to convert the heavier ends of the products to produce more gasoline. "With these improvements, TOR's efficiency improved resulting in decreased production cost with the lower cost of production reflected in the fuel price changes on October 3, 2005," Prof Ocquaye noted. He said other companies had shown interest in establishing export oriented refineries with capacities ranging from 100,000 barrels per day to 250,000 barrels per day in the Central Region specifically Saltpond, Otuam and Winneba.

It is estimated that each refinery would generate approximately 3,000 jobs and add up to Ghana's drive to becoming a net exporter of fuel and power. On the Ministry's medium term investment programmes spanning 2005-2008, Prof Ocquaye said they intended to install the second bulk supply point to be built near the KNUST and three new 33/11 kv primary stations to be built at Fawoade, Boankra and Effiduase. He said the Ministry would provide Supervisory Control and Data Acquisition (SCADA) facilities on rural and urban networks and bring system improvement projects to remove network constraints such as overloaded transformers, networks and expansion to meet new demands.

On the Government's promise in 2003 to assist the Electricity Company of Ghana (ECG) to obtain and install SCADA system, the Minister said the Swedish International Development Agency (SIDA) had supported the management of ECG to implement the installation of the system in 13 primary substations in Accra. "This has significantly improved fault detection and service restoration in certain parts of Accra. Government is in discussions with SIDA to fund the extension of the SCADA system to other parts of Accra and Kumasi as well as some of the key rural networks especially in the Western Region". Prof Ocquaye said the ECG was also utilizing funds sourced from the Norwegian Guarantee Institute and internally generated funds to implement various projects to rehabilitate; expand and improve existing network and provide civil infrastructure in Ashanti Region. On rural electrification programme, the Minister said it was being vigorously pursued under a policy, which aimed to extend power to all parts of the country by 2020.

"In 2005, we expect to connect 250 communities under our programme with current work at various stages of completion in another 350 communities, which we expect to complete by June 2006." Prof. Ocquaye said the Government had secured a 15 million-dollar funding from the Indian Government to support the electrification programme. The material for this programme has been delivered and would be deployed on the project sites soon. The Indian Government has also provided an additional 30 million dollars for other electrification projects. This is, however, yet to be considered by Parliament. Other energy sources the Government was looking at, he noted, were solar and wind sources in the Northern and Volta Regions, respectively.

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