General News Mon, 20 Jan 2003

3 days wages for a gallon of petrol

That petroleum products are beginning to dictate the lives of Ghanaians, especially those in low income earning group has become as true as night follows day.

The new price increases of 20,000 cedis per gallon of gasoline, 17,500 per gallon of diesel and kerosene, 16, 000 per gallon of marine diesel and premix fuel and 3,800 per kilogram of LPG bring a new awakening to the ordinary Ghanaian.

The new increase translates to three day?s salary of an ordinary worker for a gallon of petrol. As has been the case in the past the adjustment in the prices of petroleum will have a rippling effect on all economic activities.

The sector that will rip workers off if the transport sector. Already drivers of the Ghana Private Road Transport Union (GPRTU) have slapped new prices on poor commuters.

The increases come in the wake of 12 percent increases in the utility tariffs, besides other bills. The Minister of Energy Albert Kan-Dapaah who announced the price hikes on Friday was quick to admit the untold hardships the adjustment will likely bring on ordinary people.

An impact assessment on the latest development shows that the vulnerable will pay an extra 13 percent for their living cost. The Energy Minister said the government has therefore decided to implement measures that would ameliorate the suffering of the poor.


First, the government has decided to improve the efficiency of the mass transport system. Ten large volume buses are being cleared from the Tema harbour and will be on the road today.

An additional 50 Neoplan buses will be introduced on Monday, while 200 Italian buses would be delivered in February. Another set of 250 buses have been ordered from Holland.

Kan Dapaah also announced that in solidarity with Ghanaians, allowances and fuel subsidies of all Minister and Chief Executives of Municipal and District Chief Executives will reduce as part of measures to cut the Tema Oil Refinery (TOR) debt.

Asked to give definite percentage of a reduction in the allowance of government functionaries, the Minister said the details are being worked out and would be released to the press when ready.

Giving the background to the fuel price hikes, the Minister said the debt overhung of TOR has reached a point where government can no longer help but to charge realistic prices, it is to pay the 600bn cedis interest in addition to the principal of 3.4bn cedis.

He said the 3.4bn cedis exceed the private capital of all the commercial banks put together. Thirty percent of all the debts of TOR are owed Ghana Commercial Bank, which the minister said is in deep trouble.


Part of the problem of under-recovery of petroleum products is what the minister called ?low pricing?. He said Ghana currently has the lowest price of petroleum products. While Ghanaians as at last Friday were paying 10,500 cedis per gallon of petroleum Ivoriens are paying 33, 264, while Burkinabes are paying 33, 650 cedis.

?The grave consequences of our low pricing is that it has generated a huge smuggling industry around our border possibly adding an extra 25 percent to our oil imports?, said Kan Dapaah.

He said the government has therefore decided to introduce policies that would curb the situation. Firstly there would be no further accumulation of debts, and that government would improve upon management performances to check corruption and inefficiencies at the Tema Oil Refinery (TOR).

?The mounting losses are clearly unsustainable and if left unchecked can cause permanent damage to our economy?, the minister suggested.

Source: Public Agenda