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General News of Tuesday, 14 July 2015

Source: Tv3network.com

Fuel prices to reduce by 15% Thursday

Prices of petroleum products are likely to be reduced by 15 percent or more effective Thursday July 16.

The Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors, Senyo Hosi, says the products would be sold to the Oil Marketing Companies, OMCs at a reduced price due to the gains made by cedi against the dollar.

Prices of petroleum products, have been reviewed twice within a month by the oil marketing since the introduction of the implementation of the deregulation policy.

The prices of the petroleum products have increased by 18 percent after the two adjustments; but prices are expected to be reviewed on July 16.

Factors that contribute to the pricing of petroleum products are, the exchange rate, ex-refinery price, profit margin and fourteen taxes and levies charged by government .

The cedi has made some gains over the dollar, recording a rate of 26 percent gain in the last two weeks while the ex-refinery products have seen a 10 percent reduction

Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors, Senyo Hosi, explained to TV3 petroleum products would be sold to the oil marketing companies at a discount which must reflect a reduction of 15 or more at the pumps.

"As a result of the exchange rate and some marginal changes also on the world market, there is a strong case and expectation that the prices should reduce at the next review. The reduction could be 15% or more".

In determining the prices, the fourteen levies and taxes charged by government and their profit margins, are implemented after the products are sold to the oil marketing companies.

The Chief Executive of the Oil Marketing Companies, Kwaku Agyemang-Duah told TV3 the reduction would take place but could not mention the percentage.

With over 50 percent reduction in the price of crude oil on the world market over the past 6 months, the International Energy Agency, IEA, has predicted a further fall of product towards the end of the year.

Kwaku Agyemang-Duah said consumers may enjoy a continuous downward review of the prices of petroleum products if the cedi remains stronger against the dollar and other currencies.

"Definitely there would be a downward review. The OMCs would be contacting their respective BDCs for their ex-refinery price then based on what they get; they would be able to price accordingly".

Touching on a daily adjustment proposed by the African Centre for Energy Policy, the CEO for the OMCs said Ghanaians are not fully prepared for such changes.

"We also have to adjust our pumps to let it reflect what we say the price is and that means we have to employ GSA to come and do some work for us and it comes at a cost. We are looking at how hard a daily price review it will be on Ghanaians especially when it is going up; and we think it's a place that we have to go. But for now, we have to deal with the fortnight reviews then when Ghanaians get used to the liberalized regime, there might be the need to do that" he noted.

Meanwhile the Chief Executive of the BDCs said the chamber would embrace a daily price review of their products before they are sold out to the OMCs.