Government announces fuel price hikes

Accra, Feb. 18, GNA - The government on Friday announced new fuel prices with immediate effect, increasing the cost of premium petrol by 50 per cent at c30,000 cedis per gallon, up from 20,000 cedis. A gallon of Kerosene is now 24,000 cedis while Liquefied Petroleum Gas will now cost 5,700 cedis per kilogram. The new price of Pre-mix petrol is c21,000 while Diesel now attracts 26,500 cedis a gallon and Marine Gas Oil also c21,000 a gallon.

Mr Kwadwo Baah-Wiredu, Minister of Finance who announced the increases at a press conference in Accra on Friday, said in order to reduce the burden of the price increase on parents, government had decided to absorb the fees paid by them at the primary and junior secondary schools.


He said it had been agreed on all sides that the increases in transport charges would be pegged at 30 per cent, adding that in arriving at the increases, the consultative team, comprising road transporters and the government, took into account vehicle operating costs, as well as the impact of transport fares on the economy. The Minister said stakeholders in the transport business would publish the list of transport fares in due course.


The Tripartite Committee, the Minister said, was expected to meet to come out with new basic salary, which would be announced in the budget next week.


Mr Baah Wiredu said the deregulation would remove inefficiencies in the procurement of oil, which had previously been limited to the Tema Oil Refinery (TOR).


He said the private sector would now be allowed to import finished petroleum products - about a third of total oil demand - through open and competitive bidding.

He said government was putting in place the legal and institutional framework for the new petroleum-pricing regime.


Under the framework, he said, the Oil Marketing Companies and other distributors would be able to set retail prices according to a pricing formula and without prior review by any other authority. Mr Baah-Wiredu said government would continue to be concerned that the poor should have access to essential petroleum products, especially kerosene, on relatively favourable terms.


"This objective will be effectively achieved through careful structuring of petroleum duties and flexible formula-base pricing than it has been under the variable cross-subsidisation inherent in TOR's pricing regime."


The Finance Minister said an independent oversight body to be known as the National Petroleum Authority (NPA) would have the power to intervene to regulate prices if the formula was not applied. "As the government frees itself from the petroleum sector, resources hitherto used in subsidising petroleum products will be freed and channelled into priority sectors including health, education agriculture, rural development."


He said transport operators had prepared a schedule, which would be publicised nationwide.

"Government therefore expects an orderly arrangements of charges so that there is fairness throughout the system," Mr Baah-Wiredu said. He commended the representatives of the petroleum industry, organised labour and the private sector in arriving at a consensual model "that would permit all of us to work out appropriate responses to the extremely difficult situation that confronts Ghana."


He acknowledged that with the increase of petroleum products, the cost of living would go up and that government was not oblivious of the effect on the population, especially the poorer sections of the society.


Mr Baah-Wiredu said government was in consultation with all interested parties especially the Trades Union Congress (TUC), the Forum and the Employers' Association to negotiate and adjust wages and salaries of all workers and that the details would be announced in the budget statement next week.


He said government has therefore decided to increase the number of new mass transport busses from the current level of 354 to about 950 which would be distributed all over the country. Government would accelerate electrification of rural areas and improve electrification in other built up areas in urban centres, he added.


Mr Baah-Wiredu said to ensure that workers and any other citizens acquired consumer goods, government would introduce an improved hire purchase credit systems for them. 18 Feb. 05