Ghana to lose huge oil revenue, fuel price to drop marginally – IES

The Institute of Energy Securities (IES) is forecasting a significant drop in oil revenue if oil price continues to remain low.

At the same time, it is anticipating that fuel prices at the pump will remain same or drop marginally.

In the 2020 Budget Statement, Ghana projected US$8.9 billion from oil revenue, about 13% of total revenue and grants.

According to the Executive Director of IES, Paa Kwasi Anamua Sakyi, the coronavirus which has hit the Chinese and global economy hard will impact negatively on oil prices and revenue.

“We understand what the coronavirus has done to us; there've been travelling restrictions, a lot of flights have been canceled, a lot of shops and production outlets in China, and around China have been closed. There have been less demand for oil, that is why we’ve seen a drop in oil price in the past three months.

“From the beginning of the year crude oil price was US$65 per barrel. By the close of trading last week, it was hovering around US$45, that means there have been more than 35% fall in the price”, Mr. Anamua Sakyi said.

Continuing, he said: “If we use today’s price of US$30, then the fall in international price of crude oil is more than 50% since the beginning of the year. We’ve seen the cedi appreciating by more than 5.6% from the beginning of the year, yet the local pump price has not gone down by more than 5% from the beginning of the year, that’s woefully inadequate; one will have expected that these two key variables - the international price of crude oil and also the local currency appreciation against the US dollar - will have given consumers some form of relieve. We thought that when prices go down it goes to support positively the disposable income of Ghanaians; however, we don’t see fuel prices going down substantially, the OMCs are also complaining of the price margins.

“We are losing out on two fronts; one is the fall in projected revenue and also the possibility of much lower fuel price at the pumps.”

Mr. Anamua Sakyi explained further to Accra-based Citi FM that the decline in oil revenue will affect funding for the free senior high school education policy and other key sectors of the Ghanaian economy.

Outlining further, he said “I do not see fuel price falling at the pump anytime soon; in the worst case scenario it is going to stay the same or we will see a marginal reduction but not a substantial one to match with the international fall in price in both crude and fuel prices."

He concluded by saying that if the price of crude oil remains the same, this could lead to job losses on the global scale as companies could go bankrupt and economies of oil exporting countries will crumble.