Expect More Price Blows

... Deal with international financiers, not over yet

Accra, Feb 22, Palaver -- THE new fuel prices, announced at the week-end which has sent Ghanaians reeling, with shock, are only meant to be a stop-gap measure.

The real target of sending petrol to ?35,000 a gallon, is yet to be hit.

According to sources close to top Government financial experts, the price of ?30,000 per gallon, was reached as a compromise, since there was "pressure" from somewhere for the Government to honour its earlier promise to send the petrol price that high.

The compromise was reached, in the hope that world crude oil prices will be falling in due course, as events in Iraq, for example, return to normalcy, as well as the promise by Saudi Arabia, the world's largest exporter, to increase production to a level last seen during the energy crisis in the 1970s.

It will be recalled that during its first term in office, the Kufuor Administration, within two months, increased the price of petrol from ?6,500 to ?10,500 a gallon.

That was when the NPP Administration launched a scathing attack against the previous NDC Government for sending the Tema Oil Refinery into debt.

The increase, it was explained, was to help clear the debt.

Two years later, the Government almost doubled the fuel price to ?20,000 per a gallon of petrol.

That price was kept, even when there was a decline in the world price for crude oil. Instead, the NPP came out to announce, with glee, the huge profit the TOR, and for that matter, the Government had made, us a result of its prudent pricing policy.

Last year, however, when crude oil prices shot up, the NPP Government sought solace in political expediency and kept prices, unmoved, till the elections were over and it had managed to be declared winners.

Prior to that the NPP had written a secret letter to the World Bank/IMF to grant it a "special dispensation" to subsidize the commodity for some time.

What is happening is in fulfillment of that promise.

Early this year, Dr Paa Kwesi Nduom, a re-nominated Minister told Ghanaians that the Government won't increase fuel prices

Instead, a deregulation system was to be put in place, to handle the pricing of the commodity.

However, it is learnt some Ghanaian-owned small companies in the fuel business are expressing their reservations in competing the giant companies in the pricing of the products.

Although a Regulatory Board was also to be put in place, the smaller companies are afraid they may be priced out of the business.

However, it is reported that the Ghana Oil Company Limited is ready to compete in any deregulation exercise.

According to sources, the Managing Director of the company, Mr. Yaw Agyeman-Duah, has hinted of international financial assistants.

Earlier in the week, the Executive Director of the Centre for Policy Analysis, Dr Joe Abbey, had cautioned the Government to be circumspect in its haste to operationally the deregulation system in order not to phase out the TOR's importation of crude, in future.

Addressing a workshop, Dr Abbey demanded an assurance from Government that "TOR will not be killed, inadvertently, in the process."

Deregulation, he said, for instance, could create dislocations in the supply system, if the companies are not happy with the profit margin.

Finally, Dr Abbey asked Ghanaians to ask the Government to prove its claim that it subsidized prices of petroleum products for 2004. That claim, he said, must reflect in this year's budget and state whether all outstanding debts had been cleared.

THE PALAVER WARNINGS THAT WERE IGNORED!

We warned about it last year. The NDC's Professor Atta-Mills also warned about it. The NDC warned about it. The NPP denied it. Ghanaians ignored it. Today, we are all about to suffer for it.

Now read what was said about the NPP's secret plans to increase petroleum prices, and when.

WHAT THE GHANA PALAVER SAID--- Third, the IMF statement is categorical that the NPP Government has refused to increase petroleum prices because of the December elections but has agreed that petroleum prices will be increased some time after the elections but definitely by February 15, 2005.

Again to quote the exact words of the IMF External Relations Department statement:

"The government's decision to leave petroleum prices unchanged ahead of the election in December 2004 creates a source of vulnerability for the budget, even though the authorities have taken adequate measures to address the anticipated costs of the resulting subsidies to petroleum producers, while protecting poverty-related expenditures. Nevertheless, it will be critically important for the authorities to follow through on the commitment to replace the current pricing regime with a new regime, which will absolve the government from making pricing decisions and to implement it, as announced, by February 15, 2005". (Extract from Ghana Palaver, Vol. 10 No. 75, Friday, July 16 - Monday, July 19, 2004 under the heading "HIPC COMPLETION POINT - THE UNTOLD STORY -Kufuor lies about US$1.5 million debt write-off -Petroleum prices to go up on February 15, 2005 -Water tariffs secretly increased")

"Secondly, the World Bank and the IMF conspired with the NPP Government to postpone an increase in the prices of petroleum products to February 15, 2005, in the face of a record high world price of crude oil of over US$50 per barrel in three decades, obviously in order that the fortunes of the NPP will not be adversely affected in the December 2004 elections.

In a statement most disingenuously insulting of Ghanaians, the IMF in its Press Release in July 2004 announcing Ghana's attainment of the HIPC Completion Point, stated as follows: --"

(Extract from Ghana Palaver, Vol. 10, No. 100, Tuesday, October 12 - Thursday, October 14, 2005, Front Page Comment under the heading "The Criminal Conspiracy against the People of Ghana.

WHAT PROFESSOR ATTA-MILLS SAID---

"Since the beginning of 2003, I have insisted that the petroleum price increases as well as increases in utility tariffs are too high. I have been accused of playing politics with the economy. So how genuine is the government's planned decision to reduce tariffs in this election year?

I will only tell Ghanaians: "beware of the NPP when they come bearing gifts". ---

We will take another look at the processes for the deregulation of the petroleum sector and make sure that Government does not abandon its responsibility of ensuring that this vital lubricant of the economic engine of state is not left to be determined solely by forces whose primary motivation is profit. Above all, we will review the hidden taxes in the price of petroleum products".

(Extract from Address by Professor John Evans Atta-Mills, NDC Flagbearer, on the Occasion of the NDC "Public Forum" on the theme: "The State of Our Nation: The Way Forward" held in Accra on Tuesday March 2, 2004)

WHAT THE NDC SAID---

"It is offensive and an insult to Ghanaians that in the face of excessive economic hardships, the Kufuor Government is telling us that water and electricity tariffs, rent and fuel prices did not come down during the years of the NDC. The NDC reminds the Kufuor government that while in opposition it campaigned against what it described then as the unbearable cost of living in the country. Its leaders including President Kufuor led "YABRE" demonstrations ostensibly to solidarise with Ghanaians who were in economic difficulties. The NPP in opposition advocated the theory of affordability when it came to electricity and water tariffs and fuel prices. Yet in the three years that it has been in power, the NPP has increased water and electricity tariffs by over 200% and petroleum prices by over 200%"

(Extract from NDC Press Release of 26th March 2004 signed by NDC Director of Communications, John Mahama)

"We will ensure the fixing of realistic and reasonable prices for petroleum products by reviewing the hidden taxes and levies in the prices which are more of revenue rising than cost recovery measures"

(Extract from the NDC 2004 Manifesto entitled "A Better Ghana")