Increase in Petroleum Prices

SOME ENERGY experts have condemned the increase in petroleum prices between 6%-7% across board, which took effect from Sunday, April 1, 2007, with some describing the increase as unjustified.

Explaining the motive behind the price increase in petroleum products on a radio station in Accra on Monday morning, the Executive Director of the National Petroleum Authority (NPA), Mr. Ken Attafuah said the increase was a reflection of what was happening on the world market.

According to him, "the price has gone up on the world market and we have adjusted accordingly", adding that this was partly due to the current stand off between Iran and the United Kingdom and expressed hope that the situation would abate soon in order that the condition does not get worse than it is now.

He noted that the increase was further caused by increase in general demand for petroleum products and disagreed with the thought that the cost on diesel should have been shifted to that of petrol.

In his words, "so let us incur cost in importing diesel so that we can run diesel engines and when we finish, we can get into the TOR trillion situation and say that well, we all wanted electricity, we did not have it, we decided we will not pay for gas oil when we needed it, now we have electricity let us go and pay TOR and let us applaud TOR for absorbing the cost and being a loss making entity."

He however entreated Ghanaians to conserve energy in any form, saying, "Our watch word and guiding principle should be conservation."

The former Manager for Bulk Oil Storage Capacity Limited, Dr. Kwabena Donkor indicated that the increase in petroleum products, especially diesel would impact negatively on industry since they were currently relying heavily on it under the power fluctuation situation.

According to him, government should have been a little more creative by putting a little more on petrol to reduce that of diesel which powers the bulk of transport in the country or take a second look at taxes and levies in providing solution to the effect of price increase on the world market.

He pointed out that prices on the Ghanaian market were not dictated solely by the world market but there were also taxes and levies, which are within the country's domestic competence to handle.

Dr. Donkor noted that the situation called for policy intervention by choosing between alternatives, saying, "unfortunately, that is the responsibility of leadership, leadership has to make that choice", expressing worry that industries that compete in the sub-region were going to be uncompetitive in the short term.

Further, he noted that manufacturing companies would also have to be more creative by adjusting their production schedules, saying, "it will call for a lot of creativity by management and it is a difficult time to be a manufacturer."

Also, Dr. Nii Moi Thompson, an Economist expressed disappointment at the increase in petroleum products and the fact that there had not been any statement at the highest level of government regarding the situation which he described as very serious.

He said the hike in petroleum products had only added to the woes of people both on the social and economic front, charging, "as usual, we are toying with these things thinking they are marginal and incidental."

He blamed the present energy crisis and fuel increases on government since government had failed to provide alternative solutions as regards price increases on the world market and the low level of the Akosombo dam.

"One of the primary responsibilities of government is to find solutions to the suffering of the people and not to pass on hardship to the people with an excuse that we are in a hopeless situation", he stressed, adding, "with Akosombo, clearly it is a failure of leadership and it is another dimension of leadership crisis."

He pointed out the need for government to reconsider the tax component of petroleum products which he said were often too high and sometimes dubious.

According to him, Ghana was not the only country that suffers from extremities of the weather but in other countries, leaders always took charge in such crisis situations, lamenting, "our leaders have simply remained oblivious, thinking that somehow our development partners will come to our aid. It wouldn't happen, we just have to learn to think and think creatively."

He observed that in the midst of the current deregulation programme, prices could be absorbed but there was the need for it to be done in a transparent manner and by responsive institutions.

In conclusion he stated, "For now, industries just have to minimize the cost and pain through conservation, educate people on how to conserve water, electricity and fuel. You cannot be in this kind of crisis and behave as if nothing has happened. We are not being as proactive as we could, all because of the crisis in leadership, complicating the crisis in water, now in electricity and fuel."

On his part, Mr. Ato Ahwoi, a former Energy Minister of the National Democratic Congress (NDC) regime questioned why government increased petroleum prices in haste when it took about two weeks before a reduction in petroleum prices were applied some weeks ago.

He stated categorically that the increase was unjustified because, "at a time when industries have to generate their own power using petroleum products at high prices, you go and increase the price of diesel and kerosene which are sources of generating power for the industry."

This, he noted would further increase the cost of production which had the potential of making industrialists lay off labour thereby increasing the hardship of Ghanaians. He also urged government to review the tax component of petroleum products.

"Through their own incompetence, they have caused the power crisis, now, they are going to worsen the crisis which they have imposed on industries by increasing petroleum prices, this is not right", he intimated.

According to him, government must take a long term view of the situation and not use the Iranian -UK issue as justification to increase prices, stressing that petroleum was not the only source of income, adding, "government should stop being lazy as far as collecting taxes is concerned and be more imaginative in looking for money to run this country."