Following the recent drop of crude oil prices on the international market, the Institute for Energy Security (IES) has predicted that it does not foresee prices of fuel going down substantially on the domestic market.
This follows oil prices plummeting around 30 percent on Monday, March 9 after Saudi Arabia slashed its official selling prices and set plans for a dramatic increase in crude production next month, starting a price war even as spread of the coronavirus erodes global demand growth.
Executive Director of IES, Paa Kwasi Anamua Sakyi, has explained that since the local pump price has not gone down since the beginning of year and despite the cedi’s relative stability compared to other trading currencies, the drop in global prices would have given consumers some kind of relief.
“We thought that if prices go down, then of course it goes to support positively the disposable income of Ghanaians. However, we don’t foresee prices of fuel products going down substantially because already Oil Marketing Companies (OMC’s) are also complaining about the price market,” he said in an interview.
Mr Sakyi adds that, following the global drop in crude prices, Ghana risks losing out on two fronts particularly, one from the fall in projected oil revenue and also the possibility of much lower fuel prices at the pumps across the country.
“The most important thing is that, this is going to impact on us negatively,” he stated.
On Ghana losing out on its projected oil revenue generation following the global drop, Anamua Sakyi indicated that government will not pass on the windfall to consumers but rather expropriate that for revenue mobilization purposes.
“Exactly, it will remain so and I’m not sure that we will see a fuel price reduction at the pumps anytime soon and in the worst-case scenario, it’s going to stay the same or we’d see a marginal reduction but not a substantial one to match with the international fall in price of crude and fuel,” he added.
The Chamber of Petroleum Consumers (COPEC) on the other hand, is calling for the downward review of fuel prices at the various pumps across the country to reflect the decline in the global crude oil prices.
COPEC believes consumers could be benefitting from the reduction between 10-32 percent compared to the current 2 percent reduction.
A statement issued by the institution noted: “It is our expectation in the coming few days that the various Oil Marketing Companies and the Bulk Oil Distribution Companies will ensure the Ghanaian is given nothing but the full benefit of these sustained reductions in fuel prices on the international markets.”
“Coupled with the steady decline in international oil prices, also is the nominal appreciation of the local currency, the cedi, which has recorded an appreciation of over 5% from earlier depreciation figures of over 5.85/$ to currently trade at below 5.40/$ according to latest BOG figures,” it added.