Government supports NPA’s appeal over high court ruling on deregulation policy

Government on Monday pledged its support to the National Petroleum Authority (NPA) to take the necessary steps to implement the deregulation policy to reflect market conditions.

“It is in this regard that the Government supports the NPA’s motion for stay of execution and appeal against a recent Accra High Court ruling against the NPA.”

The pledge was contained in a statement issued in Accra by Mr Emmanuel Armah Kofi Buah, Deputy Minister of Energy.

“The Government believes that the issue of petroleum subsidies must be dealt with by clearly explaining to Ghanaians why the costly subsidies ultimately do more harm to the development of the nation and hold back the effort to alleviate the level of poverty in Ghana.”

It said the Government had taken note of the recent court ruling in which the court held that the ex-refinery differential is a tax because it is a tax, it required Parliamentary approval; and all monies collected under the “tax” must be lodged into the Consolidated Fund.

“Government agrees with the NPA that the ex-refinery differential is not a tax – that is, the differential does not accrue to Government; it is a stabilizing mechanism put in place by the NPA Board in 2006 to ensure the stability of petroleum product prices.”

The statement said all funds that had been collected into the ex-refinery differential margin account had been used by the NPA in stabilising prices over the period.

It said, “This arrangement notwithstanding, the Government subsidised petroleum products to the tune of about GH¢459 million in 2011, which subsidy is projected to be almost GH¢600 million in 2012 if the situation remains unchanged”.

The statement said, “One of the big mistakes the Government is determined not to repeat is to allow the accumulation of unpaid petroleum subsidies, which in 2008 largely caused The Tema Oil Refinery’s (TOR’s) debt to reach an astronomical GH¢1.5 billion (15 trillion cedis) – a debt that largely brought the operations of TOR to a halt for about two years and nearly crippled the Ghana Commercial Bank”.

It said over the last three years, the Government had had to raise over one billion cedis to restore the financial health of both TOR and GCB.

“The painful lesson learned through this recent history is that no matter how long we postpone the inevitable, a time comes when we have no option but to confront the harsh reality and deal with it, and most often at a much greater cost. The Government is determined not to allow a repeat of such costly option.”

The statement explained that if the court ruling is allowed to stand, it  meant the removal of the stabilising effect that the ex-refinery margin account sought to achieve.

“If the court ruling were implemented, the prices of various petroleum products would have gone up by the following percentages, Premium    by 3.89 per cent, Kerosene by 77.57 per cent, Gas Oil by 13.36 per cent, Liquefied Petroleum Gas (LPG) by 57.26 per cent and Premix by 114.46 per cent.

“By every account the Government will be irresponsible and insensitive to allow such drastic and dramatic skyrocketing of prices of petroleum products- a situation which will heap untold hardship on the people and end up worsening the economic conditions of Ghanaians.

“It is in this regard that the Government supports the NPA’s motion for stay of execution and appeal.”

An Accra High Court, presided over by Mr Justice Patrick Baayeh, in November, this year, ordered the NPA and the Tema Oil Refinery (TOR) to remove illegal margins introduced into the price build-up on petroleum products.

The court also ordered the NPA to refund an amount of GH¢690 million accrued from the imposition of the illegal margins into the Consolidated Fund.

Costs of GH¢5,000 was awarded to the plaintiffs, Mr Kwaku Kwarteng, Mr Abdul Ganiyu and Development Data, a policy research organisation.

The plaintiffs had filed a writ in September 2009, praying the court to abolish the illegal margin smuggled into the price build-up of petroleum prices by the NPA.

The illegal margins, disguised as “ex-refinery differential” from the prices of petrol, kerosene, diesel, LPG and MGL local, were imposed on June 5, 2009.

Per the ruling, the NPA is required to announce new fuel prices minus the illegal margins.

The Court further ordered the NPA to publish the total amount accrued from the imposition of the illegal margins in the Daily Graphic and the Ghanaian Times within four months of the date of the judgement and pay the amount into the Consolidated Fund.

Source: GNA

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