MP for Gomoa West berates Govt over Fuel Hikes
STATEMENT DELIVERED ON THE NATURE AND EFFECT OF THE PERSISTENT HIKES IN PETROLEUM PRODUCTS IN GHANA BY HON. RICHARD GYAN-MENSAH, MP FOR GOMOA WEST CONSTITUENCY
Right Honourable Speaker, I am grateful for the opportunity to make a statement on a most pressing issue of concern to the good people of Gomoa West and Ghanaians. The recent (persistent) hikes in the prices of petroleum products in Ghana are gradually becoming the most dreaded nightmare confronting Ghanaians. One wonders what exactly could be the reason behind the recent persistent price hikes in petroleum products.
Mr Speaker, petroleum products such as petrol, diesel, LPG, premix, etc., have become crucial components of our lives as Ghanaians. The Ghanaian economy virtually survives on petroleum products. A wide range of economic indicators, including the general prices of goods and services, such as food prices, transport fares, etc., are heavily driven by the prices of petroleum products. Data from the National Petroleum Authority website indicates that between January 1999 and September 2022, Ghana consumed 65,535,805.37 metric tonnes of petroleum products. This directly illustrates how crucial petroleum products are to the life of the ordinary Ghanaian.
For this reason, the recent persistent price hikes in petroleum products have become a great concern to the ordinary Ghanaian. Prices of petroleum products have increased over the years, with this year witnessing the most astronomical increase. At the beginning of the year, the government made the ordinary Ghanaian understand that the increasing prices of petroleum products were due to external factors like post-COVID-19 pandemic challenges and the Russia-Ukraine war. However, a detailed assessment showed that government-controlled variables, such as taxes and levies on petroleum products and the weakening strength of the Ghana Cedi, are mainly responsible for the persistent fuel price hikes.
Mr Speaker, ex-pump prices for petroleum products have risen dramatically. In 2022, the leading oil marketing companies (OMCs) raised the price per litre of petrol and diesel from GHC 6.95 and GHC 7.03 in the first pricing window in January to GHC 17.99 and GHC 23.49 in the first pricing window in November, respectively, increasing by GHC 11.04 (158.79%) for petrol and GHC 16.46 (234.15%) for diesel. Also, the indicative price (per kg) for LPG has increased by GHC 7.51, from GHC 8.84 in January to GHC 16.35 in November, an 84.99% increase. However, the international crude oil prices have been steady between September and November 2022, hovering at approximately USD 95 per barrel, and Ghana’s levies on petroleum products were likewise unchanged.
Mr Speaker, I regret to inform the House that data from GlobalPetrolPrices.com and the National Petroleum Authority website as of the first pricing window in November 2022 show that Ghana has the highest petroleum prices amongst its neighbouring countries, including Ivory Coast, Togo, and Burkina Faso.
Petrol Diesel
USD/litre USD/litre
Ivory Coast 1.175 0.999
Togo 1.061 1.297
Burkina Faso 1.127 1.03
Ghana 1.384 1.807
Mr Speaker, ordinary Ghanaians seek to know why Ghana’s petroleum prices are so high. Mr Speaker, the obvious answer is the depreciation of the Ghana Cedi against major foreign currencies, besides the unbearable taxes and levies on the ex-pump prices. The Ghana Cedi has depreciated to GHC 13.08 per USD 1.00 in November 2022 from GHC 6.02 in January 2022. Ghana imports a significant amount of its petroleum products to meet national demand. This requires a substantial amount of US dollars to make these transactions, but the Bank of Ghana has not been able to auction sufficient US dollars required by the Bulk Oil Distributing Companies (BDCs) to import petroleum products. Therefore, the BDCs are compelled to buy US dollars on the open market at a higher rate (estimated at GHC 14.47 to USD 1.00 as of November 9, 2022) than the Bank of Ghana’s rate of GHC 13.08 to USD 1.00.
Mr Speaker, the rising price of petroleum products at the pump is the clearest sign of the rising cost of living since it affects many items and services, including food, housing, clothes, energy, etc. Ghana’s unemployment rate is high; even those working earn a daily minimum wage of just GHC 13.53. Hence, a Ghanaian working at this minimum wage will earn an abysmal monthly low income of GHC 405.9 (USD 28.99) but spend almost double the daily minimum wage to buy a litre of diesel or petrol. Rising petroleum prices have significantly affected many transportation and distribution companies. Most of these businesses have pushed their operational costs to the ordinary Ghanaian.
Mr Speaker, transport costs have doubled in the previous weeks. For example, transportation from Kwame Nkrumah Circle to Parliament House, which cost GHC 5.00 two weeks ago, now costs GHC 7.00, yet salaries have not increased. Mr Speaker, a national service personnel, posted to the Parliament of Ghana and living in Tabora (one of the closest localities to Parliament), will need to pay GHC 36.00 a day (GHC 720.00 a month) to commute to and from Parliament. Sadly, national service personnel only receives GHC 559.00 per month as an allowance. This means the person will have to borrow an additional GHC 170.00 a month for transport alone. Mr Speaker, how would the national service personnel buy food and clothing and pay for accommodation?
The increases in petroleum prices are unbearable, bringing untoward hardship to the citizenry. As an MP, it used to cost me GHC 560.00 to fuel my Toyota Fortuner (2.7-liter engine) while driving from Accra to my constituency, Gomoa West, a few months ago. Because of recent price increases in petroleum products, I now have to pay a whopping GHC 1,300.00 every weekend to fill up the same vehicle used to perform parliamentary duties in the constituency, excluding weekday fuel costs to Parliament. Imagine how much a parliamentarian representing the people of Nandom (830 km from Accra) will spend on fuel to visit the constituents on weekends. Moreover, the fare of VIP buses from Accra to Kumasi has risen from GHC 80.00 to GHC 120.00 in the last two weeks. A 90 km journey from Circle to Koforidua costs GHC 43.00, up from GHC 31.00 in October 2022.
Mr Speaker, the surge in transportation expenses has also affected the pricing of basic commodities, such as plantain, maise, yam, tomato, oil, and onion. A bunch of plantains (apem) that cost GHC 20 in September 2022 now cost between GHC 50.00 and GHC 60.00. A GHC10 tuber of yam now costs GHC 26.00, even though we are in the harvesting season of these staple crops. Again, 4.50 litres of palm oil, which used to cost GHC 80.00, is now selling for GHC 110.00. Mr Speaker, a bag of sachet water now costs between GHC 10.00 to GHC 15.00, up from GHC 6.00 in October. Mr Speaker, bottled and sachet water producers have increased prices due to rising fuel prices. The situation is pitiful and poses a serious national security threat.
Mr Speaker, as the LPG price escalates, Ghana’s climate change initiatives will be worthless because the Rural LPG Promotion Program to minimise fuelwood usage will not accomplish its objective. How can the average Ghanaians in Gomoa Debiso, Ajumako Asaasan, Awutu Bontrase, Gomoa Olefreku, Daga Sombo, and Asesewa continue to use LPG if a 14 kg cylinder costs more than GHC 200.00? Due to the increased fuel prices, the charcoal demand has increased, increasing the charcoal’s price from GHC 80.00 in October 2022 to GHC 110.00 in November 2022. Mr Speaker, Ghanaians are suffering, and the government must immediately put measures in place to curtail petroleum products’ skyrocketing prices to ease the plight of ordinary citizens.
In conclusion, Mr Speaker, Government may consider the following measures:
- Subsidise prices using revenue from the crude oil windfall profits.
- Suspend petroleum taxes and levies until the price per litre falls below GHC 10.00.
- Ensure BDCs have a stable supply of foreign currencies to import more fuel to meet growing national demand.
- Engage the BOG and Association of Bankers on the Single Obligor Limit as trading lines issued to BDCs have reduced drastically because of the depreciating cedi
- Engage and support the BDCs to enable them to import cheaper petroleum products with 50 ppm quality to lower the ex-refinery prices.
- Take a second look at the cost of discharging petroleum products in Ghana, especially at the port and CBM charges which are the highest in the sub-region.
- Compel the Metro Mass Transit and Bus Rapid Transit System (Ayalolo) to provide adequate and cheaper public buses to ease the transportation hardship on Ghanaians.
Over the medium and long term, the government should:
- Conduct high-level stakeholder engagement, including industry practitioners, civil society organisations, and Parliament, to find a lasting solution to the incessant price hikes.
- Strengthen Tema Oil Refinery (TOR) to fully utilise its 2.6 million and 9,000 metric tonnes storage capacity for petroleum products and LPG, respectively.
- Create a favourable atmosphere to boost private sector investment in petroleum refinery to increase local production.
- Revive TOR’s core objective of processing crude oil locally to cut foreign exchange expenditures and enhance petroleum product availability.
- Implement prudent economic management to control the depreciation of the cedis.
- Ensure BOST adheres to its core mandate of holding strategic stocks to meet national demand throughout the year.
Once again, Rt. Honourable Speaker, I am eternally grateful for this opportunity. Thank You.
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