Energy Minister denies fuel crisis

The Minister of Mines and Energy, Dr John Abu says there is no looming fuel crisis in the country as the Tema Oil Refinery (TOR) has contracts for the supply of crude oil.

He said there is also no immediate decision to increase the ex-pump prices of petroleum products despite rumours that have been sweeping across the country. "The situation is reviewed every week. I find it difficult to accept there is a crisis. We accept that on some occasions, the supply is not adequate, but the situation is under control," he told the Ghana News Agency in Accra.

Dr Abu said TOR is well exposed because of the volatile situation on the world market, but it has contracts with companies and suppliers, who are scheduled to deliver. "Once in a while, deliveries do not come and we have a few problems. We are positive we can supply fuel to the country. I don't think we are heading for a crisis. "Some of the creditors are concerned (about TOR's financial position), but others have confidence in us. The credit arrangements are for 90 days or 120 days, so people are committed."

TOR has been concerned about its rising debt because it cannot recover the full cost of petroleum products. Crude prices have jumped up and the exchange rate has gone up from 3,500 cedis to the dollar at the beginning of the year to about 6,600 today. But the general feeling is that it would be politically suicidal to hike prices at this time when elections are only three months away. An ex-pump price increase in petroleum products triggers a chain reaction that sends those of goods and services shooting up.

Finance Minister Kwame Peprah said last week that fuel prices on the world market have doubled to about 32 dollars a barrel in one-year sending shock waves throughout the world. With the prices of Ghana's major exports, cocoa and gold, at rock bottom prices, the economy has been reeling. Several European countries have experienced serious upheavals in the past couple of weeks as irate truck, ambulance and taxi drivers and farmers, among others, have carried out blockades of refineries to force governments to cut prices.

Dr Abu said Ghana, being at the centre of countries in the sub-region with low fuel prices, has seen seepage of petroleum products, but the government has put in place a network to reduce smuggling. Neighbouring Togo this week announced an ex-pump hike that makes their prices twice as expensive as in Ghana. Dr Abu appealed to motorists to use fuel sparingly as the government would not want the country to reach the level of a crisis as happening in other countries. He advised those living along the borders to check smuggling into neighbouring countries and warned that any station that is involved in the smuggling would be closed down.

Oil Marketing Companies (OMCs), however, warned last week that the industry faces a precarious future as the refinery's ability to deliver keeps dwindling. They are, therefore, suggesting an increase in the ex-pump price of petroleum products to keep supplies running.