Business News of 2014-06-28

NPA to decide fuel prices this weekend

This weekend could be crucial for many consumers as Ghana’s National Petroleum Authority (NPA) meets to decide whether to increase the prices of fuel or maintain it.

It is widely speculated that on Tuesday July 1, 2014, fuel prices will go up by about 20% to enable oil distribution and marketing companies to recover the cost in procuring crude oil into the country as the fall in the value of the cedi against the US dollar has increased crude oil import cost.

The Public Relations Officer of the NPA, Yaro Kasambata told the B&FT on Friday that the Authority is still uncertain about whether prices of fuel will go up or be maintained next week, a situation, he said, will become clearer when officials of the pricing department conclude their analysis this weekend.

“I cannot say that for sure. Those who have speculated this thing are reading the market and examining the petroleum products prices that have been published.

“They may not be wrong that based on these figures and factors, prices of petroleum products could go up by this margin or that. This is simple arithmetic and anybody without the NPAs approval can predict fairly the margin that must be increased.

“As to whether it will be increase is a question of fact. At this stage, it will be a bit speculative because our team is still collating figures and we will meet over the weekend. We will look at the overall effect of what we have and that will be the decider that on June 30th or July 1, prices should go up or stay flat.

“As we speak, we are still working of the figures. It will be a bit difficult to say that by Monday or Tuesday, prices of fuel are going to go up by this margin. It’s a bit too early.

“What has brought about this is that some of the stations are hoarding in anticipation of price increase. Where such cases exit, the police have assured that they will intervene and order the filling stations to sell to the public,” he said.

Currently, Premium sells at 273 Ghana pesewas (GHp) a liter at the pumps while Diesel is sold at 265GHp per litre. Kerosene is also traded at 261GHp a litre and 287GHp a kilogramme for LPG. Gas Oil and premix fuel have been pegged at 279GHp and 125GHp a litre respectively.

Since the year began, prices of petroleum products have been adjusted upwards by three times, which sums up to about 16 percent as a result of the slide in the currency -- which seems relentless despite the strong intervention by the central bank in February.

The NPA, which adjusts prices fortnightly, has forecasted a weaker cedi in the next couple of months, implying more pain in store for consumers- who are also struggling with energy supply rationing.

As of now, business activities had virtually ground to a halt as acute fuel shortage has hit most parts of the country following government’s failure to pay bulk oil distribution companies (BDCs) several billions of dollars being subsidies on petroleum products since 2011.

BDCs have warned that government’s failure to pay up about US$1.5billion -- a figure the Finance Ministry has disputed to be around GH?300million -- could result in stocks that could last for about three days as their inability to raise letters of credits from the banks to pay suppliers could cut supplies.