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The government has said it is unable to reduce fuel price because external and internal factors are responsible for the increase or otherwise of the market price.
It said it is concerned about the recent hikes in fuel prices but had little to do in controlling them because of the factors that determine the prices.
“Government gets worried when fuel product prices are increasing because of the multiple effects that it could have not only consumer’s welfare but also on the economy as a whole. But as you may know, government does not fix petroleum product prices any longer because of the deregulation policy in the petroleum sector which began as far back as 1995,” a Deputy Energy Minister, Dr Amin Anta said at a press conference in Accra yesterday.
Fuel prices in recent weeks have been on an upward trajectory prompting fears that could trigger transport fare increases which would eventually affect living standards.
But Dr Anta said the recent hike is determined by demand, supply, depreciation of the cedi and international crude oil prices.
Quoting the international energy agency, he said global demands for oil has increased by 1.6 million barrels daily over the last quarter with supply falling by over 720,000 barrels daily, underscoring basis for price increment.
He also cited the cut in production by Organization of the Petroleum Exporting Countries (OPEC) and the importation of oil by the United States of America as some of the reasons for the hikes.
“The reality is that neither the government, as an executive, nor the NPA as the regulator has the responsibility of fixing petroleum product prices. They are determined by the market forces,” he stated.
In his view, it was important to allow the market determine the prices of the product because in the past subsidies on petroleum product prices tended to be a bother for government and for the economy.
What government has control over in determining the price, Dr Anta said, are the taxes on petroleum products which he said was consistent with the current government’s electioneering campaign.
He cited the abolishing of the excise tax and the reduction in the special petroleum tax from 17.5 percent to 15 as evidence of government’s commitment to ensure petroleum products were cheaper.
“It took a bold government to abolish the excise tax, which has been a long standing tax on petroleum products, even though global oil prices came down, and through the deregulation, the prices further came down, we still found that to be relatively higher. We have done so much already to bring the prices down,” he noted.
He said that apart from the taxes, “there are a number of levies and margins” – statutory and distribution-on the product which all contribute to the price build-up.
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