Fuel prices to fall by 8%

Fuel prices from Monday, March 16, 2020, are expected to fall by between 5 to 8 percent, which would bring some relief to consumers but whether commercial vehicle operators would reduce fares is another matter to fight over another day.

Even though crude prices collapsed on the world market a week ago, by falling more than 30 percent in a day of trading, the cedi came under pressure and some of the gains made have seen significant erosion which influences OMCs decision to reduce prices by as much as 8 percent only, even though the market is expecting a bigger drop in prices.

When crude prices plunged as a result of a battle between Russia and Saudi Arabia, Civil Society Organisations, politicians and other industry players called for a significant drop in fuel prices but then the local currency was feeling some pressures and has fallen by 2.62 percent against the U.S. Dollar to currently trade at an average price of GH¢5.48 to the U.S. Dollar over the period under review.

Background

When prices of crude started falling due to coronavirus pressures, OMCs hardly budged even though the local currency has risen by more than 5 percent against the dollar.

The Institute for Energy Security (IES), a think-tank, noted in a conversation that in the last pricing window in February, prices of petroleum products on the local market remained largely stable.

As a result, the national average price of fuel per litre at the pump is pegged at GH¢5.36 and GH¢5.38 for Gasoline and Gasoil respectively. The Institute’s price projection seems to be at variance with the estimation of the National Petroleum Authority (NPA), as it takes cognisance of the huge stockpile of finished products before the Monday international price crash, as well as the significant fall in the value of the Cedi against the US Dollar.

The National Petroleum Authority (NPA), earlier this week, said per its calculation, fuel prices at the pumps may go down by 15 percent on March 16, which is the start of the next pricing window.

Chief Executive Officer of the NPA, Hassan Tampuli, said although prices are due to go down, due process must be followed. He explained that the deregulation policy allows for two window periods within which price adjustments are to take place and that the next price window is March 15th, at which time the changes would be effected by the OMCs.