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Business News of Friday, 16 February 2018

Source: thebftonline.com

IES rejects 2% reduction in Special Petroleum Tax

Ghana’s Parliament has amended the Special Petroleum Tax (SPT) by passing the Special Petroleum Tax Amendment Bill to reduce the tax from 15 percent to 13 percent.

The passage of the amendment now plugs in the SPT levy as a static from the initial arrangement which saw the tax also increase or decrease when petroleum prices also goes up or down.

Speaking to newsmen in parliament, the Chairman of Parliament’s Finance Committee, Dr. Mark Assibey Yeboah that, “the reduction is a big relief to everybody. We wanted relief for consumers not just for today but going forward.”

With the passage of the Bill into law, petrol price at the pumps would reduce from GHS4.67 per litre to GHS 4.51 per litre whilst diesel would be sold at GHS4.48 per litre instead of the GHS 4.67 per litre.

The government in 2015 introduced the tax because of the sharp drop in crude oil prices, which was sold as low as $28 per barrel on the world market to help fill the gap in its revenue target.

However, crude oil is now being sold at $61.21 an equivalent of GHS274.04 per barrel which is $33.21 higher than it was when the tax was introduced.

Hence the government’s move to reduce the percentage of the tax from 15 percent to 13 percent instead of completely scrapping it as the minority and civil society groups have called for.

Meanwhile the Institute for Energy Security (IES) has predicted a slight dip in the prices of fuel at the pumps within the second pricing window for the month of February, 2018.

IES in a statement copied to thebftonline.com said, the forecast is based on “positive indicators recorded within the period under review [first pricing window]; being the stability of the local currency, the drop in crude oil prices and Gasoline and Gasoil prices”.

According to the IES, “instead of prices at the pump dropping slightly. However, prices may remain stable at the pumps if Oil Marketing Companies (OMCs) decide to rake in some revenues as a result of recent sacrifices made”.

IES further admonished government to show commitment to the people of Ghana by scrapping the Special Petroleum Tax “in this era of high fuel prices, as a proposed 2% reduction will have no significant impact at the pumps”.

The institute indicated that government’s intervention through the National Petroleum Authority’s stabilisation mechanism is not enough as it failed to halt the upward review of prices in the last pricing window.

IES Market scan shows the top 5 OMCs with the cheapest prices on the market being Zen Petroleum, Benab Oil, Pacific Oil, Lucky Oil and Frimps Oil.

The statement said within the last 14 days, Brent crude has seen a downward trend in price, falling from $69.57 per barrel to close trading at $67.25 per barrel; representing a change of 3.33%.

Today, Brent crude is selling at $62.72 per barrel, a sharp decline as compared to prices recorded 4 weeks ago. Platts benchmark shows petroleum products are decreasing in prices, with Gasoline now averaging $656.45 per metric tonne, a 1.9 percentage change. Price per metric tonne for Gasoil reduced from $614.95 to $594.95, a change of 3.25%.