General News of 2014-07-14

Removal of fuel subsidy cause of 23% increment – NPA

The National Petroleum Authority (NPA) has attributed the 23% increment in petroleum prices to the removal of the fuel subsidies, the prices of crude oil on the international market and the depreciation of the Ghana cedi.

The Public Relations Officer of the Authority, Yaro Kasambata on the Citi Breakfast Show, said since the government is no longer subsidizing the price of petroleum products, consumers would have to pay the full cost.

About two weeks ago, the NPA indicated it will increase the price of petroleum products after an acute shortage of the product hit various parts of the country, especially Accra.

The shortage was caused by the inability of government to settle its debts promptly to Bulk Oil Distribution Companies (BDCs).

The shortage reignited the discussion on the payment of fuel subsidies as some consumers indicated their readiness to pay the full cost of petroleum prices.

Mr. Kasambata said the irregular payment of fuel subsidies by government in time past “was choking the industry…and there was this idea that let the price go so that the banks will feel the confidence they need so that Letters of Credit (LC) will be honoured by BDCs.”

He explained that the NPA determines the timing for an increment or otherwise based on the government decision to intervene.

“The government has the greater picture at any time, and if tomorrow it feels strongly that it needs to give a pesewa relief on each and every individual, and they have the money to pay; we as an Authority, or even the industry will not say no to it,” he said.

Meanwhile, Deputy Energy Minister, John Jinapor said prior to the increment, the government monitored the system “to a level where it makes economic sense to pass a bit of the cost to consumers so that we can still continue to sustain the economy and run other programmes.”

He insisted the government is being “realistic” because “we cannot continuously pay about GHC 400 million to them [BDCs] when we can also use the money to ensure that hospitals run and to ensure that other parts of the economy moves on.”

Source: citifmonline
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