Mr John-Peter Amewu, Energy Minister, says international market conditions have weighed strongly against domestic price of petroleum products as international crude oil prices continue to increase and currently estimated at $78 per barrel.
He said therefore, apart from the application of the Price Stabilization and Recovery Fund to cushion consumers, governments had made progress in its efforts at securing a Government- to -Government oil supply arrangements to address the supply side factors of petroleum products prices.
“We are hopeful that these and other measures government is adapting should be helpful in mitigating price behaviour of petroleum products in the foreseeable future,” Mr Amewu stated at a press conference in Accra.
He said it was important that Ghanaians acquaint themselves with factors accounting for driving the current global prices which were Organisation of Petroleum exporting Countries (OPEC) and non-OPEC agreements to cut global production to drive prices of oil; and the decision of the United States to reinstate economic sanctions on Iran.
He said the National Petroleum Authority (NPA) plays a supervisory role by determining the price benchmarks and ensuring that Bulk Distribution Companies (BDCs) and Oil Marketing Companies (OMCs) set their prices in accordance with the Prescribed Petroleum Price Formula which is based on the components of the import parity Mechanism.
He noted that the NPA reviews the indicative prices submitted by each BDC and OMC for every pricing window to ensure that the realistic prices are set by BDCs and OMCs, and to ensure consumers are not taken advantage of in a deregulated environment.
“It is worthy to note that the price deregulation has led to keen competition amongst Petroleum Services Providers (PSPs) thereby keeping prices very competitive,” he said.
He noted that Ghana was a net exporter of oil; however, it must be noted that the Government receipts from oil exports was not the entire total oil export earnings.
“It is limited to Ghana Government share of oil as prescribed in the Petroleum Agreements signed between the government and IOCs (International Oil Companies).”
He noted that besides, Petroleum Revenue management Act 2011 (ACT 815) prescribes how government spends its receipts from the exports of crude oil.
Mr Amewu said it was therefore, disingenuous for any person or group of persons to call for government and to set aside the petroleum revenue law and use the oil for other purposes
He said the Government had used tax interventions to mitigate the impact of domestic petroleum product price increases.
He cited the various tax interventions implemented by the Government since March 2017 to August 2018 to include removal of excise duty on 16th march 2017; reduction of the Special Petroleum Tax rate from 17.5 per cent to 15 per cent on 16th march 2017; and the reduction of the Special Petroleum Tax from 15 per cent to 13 per cent on February 2018.
Others were conversion of the Special Petroleum Tax from Ad to Specific Tax on 16 February 2018; and the reduction of the price Stabilisation and Recovery Levies (PSRL) from 1st December 2017; and currently the PSRL had been reduced from GHP12/Lt to zero for petrol,, GHP10/Lt to zero for diesel and GHP10Kg to GHP3/Kg for LPG.
He said the revenue loss to government on the removal of the Excise Duty and the reduction of the PSRL alone between December 2017 and June 2018 amount to over GH¢232 million.
Mr Amewu said due to Government tax interventions the current prices of both petrol and diesel were selling at GH¢5.12 per litre.
He said the price for the previous window was GH¢4.90 for petrol and GH¢4.94 for diesel; and that this represents a change in price from the previous window by 4.49 per cent for petrol and 3.64 per cent for diesel.
He said without the Government intervention, prices would have been GH¢5.54 for petrol and GHp5.50 for diesel.
He noted that this would have led to a 13 per cent increase in the price of petrol and 12 per cent increase in the price of diesel; adding that therefore, as a result of Government interventions, petrol is nine per cent less expensive than it would have been without government eight per cent less expensive than it would have been without government interventions.
Mr Amewu said the significance of government tax reduction could be judged from the fact that the total component of taxes, levies and margins in the ex-pump prices of petroleum products reduced from 40 per cent in March 2017 after the New Patriotic Party (NPP) Government came into office to a current 26 per cent.