A gallon of petrol is expected to sell at 19,500 cedis, up from 10,500 cedis, a reliable government source told newsmen in Accra on Wednesday. The source said the increase to be announced by the end of the week, would also affect other petroleum products.
Speculation of an imminent increase in fuel prices had led to shortages in Accra with the fuel dealers and officials of the Ministry of Energy giving different reasons for the shortage.
While the fuel dealers said the refinery was not meeting their demands, officials of the ministry have said the refinery was pumping out its normal supplies.
They blame the dealers for hoarding fuel in anticipation of an increase so as to reap a windfall.
There have been heated public debates on a fuel price increase. Although there is a general agreement that the prices are low, there is disagreement about the percentage increase since a fuel price hike affects the prices of goods and services.
The government had said repeatedly that it could no longer maintain the low prices in the face of rising crude oil prices and depreciating currency.
The cost of a barrel of Brent Crude is 32 dollars, up from 19 dollars in 2001 while the exchange rate to 8,800 cedis to the dollar as against 7,050 cedis as at March 2001. These had led to huge debt incurred by the Tema Oil Refinery (TOR).
Ex-pump prices in Ghana are the lowest in the sub-region giving rise to active smuggling of petroleum prices to neighbouring countries.
According to Dr J.K. Richardson, Chairman of the Interim Management Committee of TOR, total petroleum sector or TOR debt stood at more than 4.5 trillion cedis at the end of December last year.
This was made up of medium term bonds of four trillion, 25 billion and 563 million cedis (4,025,563,000,000) plus TOR non-recovery of five hundred billion cedis (500,000,000,000).
Giving details about TOR's debts, the statement said the refinery's debt was accumulated largely between 1999 and 2000 because the ex-refinery prices did not permit it to recover costs in full.
"The total debt as at 31st December, 2000 was 3.2 trillion cedis, made up of bank overdraft and loans and amounts owed to creditors."
It said the amount reported to the government when it took over was 2.1 trillion cedis as at January 2001, which were the matured debts.
"An amount of 1.1 trillion cedis was owed to 'creditors', specifically to cover letters of credit for crude oil and product purchases which had not yet matured and were believed by TOR to be the direct responsibility of the government.
"This amount was unfortunately not reported to the new government at that time."
The statement said the government became aware of this huge encumbrance in 2002 on detailed examination of the audited account of the company for the year 2000. It said fuel price increases of 2001 were not implemented until late February of that year.
"Consequently, there were almost two more months of under recovery of costs totalling 207 billion cedis."
The statement said total debt therefore at the end of February 2001 was 3,392,563,000,000 cedis.
This was made up of 2,104,500,000,000 in bank overdrafts and loans, 1,080,748,000,000 owed creditors and 207,315,000,000 being the shortfall for January and February.
The statement said this debt has increased since February 2001 due to interest charges.
