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mr alexander mouldThe Former Chief Executive of the National Petroleum Authority (NPA), Alex Mould, is predicting a 20% reduction on prices of petroleum products beginning April 1, 2020.

According to him, “per the daily price indicators used for the Petroleum Price Build-Up (PBU) and published by the NPA, we have seen world crude oil prices dropped from $540/ton (t) in March 1 to $212/ton (t) which translates to a drop of 60%.”

“Going by these PBU indicators and the methodology used to derive them, we expect petrol prices to go as low as GHS GHS4.00/litre.

“This price can go down even further with Government interventions in the form of tax breaks” he noted in a press statement.

The Finance and Energy Expert said the challenge faced by the current season provide a responsibility for the the overnment to quickly visit “win-win” opportunities to alleviate some of the financial burdens on all Ghanaians.

As the lockdown to combat the spread of the coronavirus is now in effect, Ghanaian families and businesses will have to reset. A domino effect on our economy caused by the pandemic is expected to bring about challenges such as loss of income, business, increase in the costs for goods and services, and other factors impacted by increased transportation costs.

The challenges of the current season provide a responsibility to quickly visit “win-win” opportunities to alleviate some of the financial burdens on all Ghanaians – April 1st presents a “no-brainer” opening to reduce the cost of petrol at the pump.

Petrol is at its lowest price since the 1990s – $0.38/gallon wholesale from U.S refiners and Wholesalers. With this in mind, Ghana should expect a drastic drop of up to 20% in petrol prices on April 1st.

Petrol is currently imported into Ghana for less than $0.24/litre or GHS 1.40/litre (based on FX rate of GHS5.85 GHS/USD).

The daily price indicators used for the Petroleum Price Build-Up (PBU) as published by the National Petroleum Authority (NPA) are as follows:
– 1st March: $540/ton (t)
– 16th March: $434/ton (t)
– 1st April: $212/ton (t)

This translates to a drop of 50% from 16th March and a 60% drop from 1st March.

Going by these Price Build-Up (PBU) indicators and the methodology used to derive them, we expect petrol prices to go as low as GHS GHS4.00/litre. This price can go down even further with Government interventions in the form of tax breaks.

From the PBU, the taxes and distribution costs of petrol are GHS1.50/litre and GHS1.10/litre respectively (or GHS 2.60 combined); which represents about 65% of the pump price of petrol.

This makes Ghana one of the highest-taxed countries with respect to petrol.

I am reliably informed that Government is being advised to seriously contemplate removing the nuisance “Special Tax” (GHS0.46/litre) and the outdated “Price Stabilization” levy (GhS0.16/litre). If done, we could see prices fall even lower than the expected GHS 4.00/litre to below GHS 3.50/litre.

Enacting these very doable reductions would be a relief to so many – remembering that nearly 80% of our population constitutes key workers who, in serving the public will have to embark on alternate (and more expensive) transportation means to keep themselves safe, as per social distancing guidelines.   

Notes
·   Note: a US Gallon is 3.875 litres whereas a UK Imperial Gallon – what is used in Ghana – is 4.5 litres.

·  PBU is agreed to by all the players in the value chain – (Chamber of Bulk Distributors (CBOD), Association of Oil Marketing Companies (AOMC), Tanker Owners, and Tanker Drivers; collectively the sector players).

Logo displayThe Association of Oil Marketing Companies (AOMCs) has responded to some publications citing comments and calls by some people and civil society organizations for OMCs to slash current pump prices.

In a statement issued to the Ghana News Agency and signed by Mr Kwaku Agyeman Duah, Chief Executive Officer of Association of Oil Marketing Companies (AOMC) said the Association respected the opinions of such people and institutions but was of the view that they were “not ceased with the full facts”.

It said during the past year when international market prices soared and the cedi also depreciated, the consequences of high prices on the ordinary Ghanaian prevented OMCs from pricing appropriately, resulting in huge losses.

Additionally, it said these losses were considered subsidies which OMCs were technically gifting our cherished consumers on a daily basis at retail outlets on the price at the cost of 81million Ghana Cedis per month.

It said these subsidies were derived from the already depressed margin, for the Retailers and Marketers, which have not seen any change since March 2018, however, the supposed full value of margin was never realized throughout the year 2019.

"These losses led to a good number of our members’ inability to pay their employees in a regular fashion, inability to settle other financial obligations such as loans, etc when they fall due, delayed SSNIT contribution payments, the inability of some OMCs to load petroleum products, as well as honour some statutory fees and charges," it said.

It said OMCs contemplated laying off workers due to these difficulties plaguing at that time, while consumers benefitted from the sacrifice of OMCs who even though increased prices slightly occasionally.

"Such increases were not in similar magnitude as the increases in the world market prices and the depreciation of the cedi last year".

It said in March 2020, the decline in world market prices and a strengthened cedi, OMCs/LPGMCs now have the opportunity to recover from the huge losses thereof, while bearing in mind the sufferings of the consumer.

It said a preview of the price build-up comprising Ex-refinery price, taxes and levies and marketers and dealers’ margins indicates that, for the expected public expectation of between 10 per cent to 20 per cent reduction to occur, one of these parameters would have to suffer.

However, our margins have suffered enough, it stated.

"It must be emphasized that we have not revised our margins of 65.1Ghp since 2018 (i.e.two years now), notwithstanding the rising cost of operations," it said.

Additionally, it said by the foregoing, people should not expect equal magnitude of decrease at the pumps as we need to recover from some losses made last year.

“The beauty of deregulation was that, these losses varied from one OMC/LPGMC to the other, reflecting in the price variations at the pump and higher volumes in 2019 made relatively more losses over the period and thus will take a much longer time to recover relative to others with relatively lower volumes, given the same quoted market price”.

It said these prices were computed by OMCs based on price build-ups issued by the regulator, the NPA, on a bi-monthly basis. These price build-ups must be completed independently by the OMC/LPGMC and submitted to the Regulators.

The Association promised not to do anything to compromise the quality and quantity of products dispensed at the pump or short-change them, in an attempt to make abnormal profits which invariably did not exist.

mr kwaku agyeman duahMr Kwaku Agyeman-Duah, the Industry Coordinator of the Association of Oil Marketing Companies (AOMC), at the weekend lauded GOIL Company Limited for its local content initiatives and involvement in both the downstream and upstream business.

Mr Agyeman-Duah noted the contribution of GOIL to national development, saying “GOIL’s excellent services in the provision of quality products and services in all the critical sectors such as Aviation, Bunkering, LPG, Lubricants and other fuels deserves commendation.

The AOMC Industry Coordinator said this at the 2019 GOIL Awards and Annual Get-together organized to acknowledge the contributions of frontline staff comprising Dealers, Supervisors, Pump and Lube attendants.

Mr Kwamena Bartels, GOIL Board Chairman, urged the staff to continue to carry the banner of the company by working harder to entrench the company’s leadership position.

Mr Kwame Osei Prempeh, GOIL Managing Director, expressed gratitude to dealers, distributors, attendants, staff and all stakeholders contributing significantly to the company’s successes.

GOIL honoured 62 frontline staff comprising Dealers, Supervisors, Pump and Lube attendants, whilst the contribution of 17 other staff who had served the company between ten and 25 years received long service awards for uninterrupted dedicated service to the GOIL family.

GOIL Sebrepor Filling Station near Tema in the Greater Accra Region was adjudged the overall National Best Dealer and the Best Lubricant Dealer in the Southern sector.

The GOIL Sebrepor Filling Station also won the Best Go Café in the Tema Zone, whilst its Best Lube Bay attendant George Kofi Yevuyibor, was recognized in the Zone.

The Dealer of the station, Ms Georgina Gyabeng, will benefit from a five-day sponsored trip abroad with paid hotel accommodation and $2,500.00 spending money in addition to a plaque and a certificate of recognition and a citation.

The Best Zonal Dealer in the Southern Zone was won by Ms Aretha Baker Woode of the Burma Camp Filling Station; the South-Eastern Zone prize went to Mr Samuel Lawson Owusu of Aburi Gyankama Filling Station, whilst the Best Dealer in the Middle Belt Zone was received by Mr George Boadu of Asonaba Filling Station, Kumasi.

In the Upper Middle Belt Zone, the Best Dealer Award was won by Mr Jones Peprah of the Kintampo Filling Station, while the Western Zone Best Dealer went to Mr Samuel Ato Mensah of Abease Filling Station, Cape Coast.

The Northern Zone Best Dealer was received by Mr Rashid Kassim of Dungu Filling Station.

Each of the Zonal Best Dealers received a five-day sponsored trip abroad with paid hotel accommodation and $1,000 spending money as their prizes.

GOIL also rewarded the longest-serving Dealer, Mr S. K. Hoenyedzi from the Guggisberg Filling Station, Accra, for serving the company for 46 years.

GNA

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