Q & A with Energy Minister

Energy Minister, Prof. Mike Ocquaye took office just a fortnight ago with a major responsibility ? to lead the petroleum de-regulation policy mentioned in the President?s sessional address. But even before he got off to explaining the policy to Ghanaians, he?s faced with a situation ? an apparent shortage of fuel ? which might make his job all the more difficult. So in the following interview he answers some pressing questions.

? Is there are fuel shortage?

There is what we may call an artificial situation. We are seeing what we did not see last week. [But] TOR has released the requisite amount of fuel. On the 7th [of February] they gave out 3,162,850 litres. On the 8th of February, they gave out 3,417,050 litres. On the 9th, they gave 3,044,500 and on the 10th 3,447,700. On the 11th they gave out 3,970,400 litres. The current daily average [from TOR] is 3,275,000 litres whereas our daily national requirement is 2.5 million litres. You realize that if everything were going normally, there will be no shortage anywhere. But well, people are speculating.

? This speculation is because people, the fuel dealers especially, are waiting for an announcement about the deregulation policy as mentioned by the president in his sessional address. Do you agree?

What we are doing now is to work out the dynamics. What is happening now, among other things, is also to consult stakeholders. We are talking with labour; we are talking with employers, transport owners and so on and so forth so that ameliorating factors? can be seriously looked at.

? What is this deregulation policy about?

It is a process by which we will be consistently? removing controls and subsidies. Then petrol will be sold on the free market like any other commodity as an unsubsidized commodity.

? Many Ghanaians will hope that day never comes.

I don?t think we should be that pessimistic. There are companies that are willing to come to Ghana, import crude, process the crude here in Ghana [by setting up] refineries and then export the product to other countries. We will have employment and we shall have taxes from those companies. Which tells you that a lot can be done. TOR can be privatized to some extent? to make it more efficient. The concept of privatization still underscores the process to make the [petroleum] industry more efficient, put in capital ? both foreign and local ? and make it more beneficial. And who knows? Competition may itself bring down prices because it has been shown in economics that it happens with many other commodities.

? Is the World Bank and the IMF in all this?

It is a matter of partnership. We are working our dynamics as a sovereign people. The IMF and the World Bank are development partners. We are currently subsidizing fuel to the tune of about 200 million dollars annually ? [about the same amount we gain from HIPC]. These are matters which have nothing to do with party politics. These are economic issues. And the idea is that we should be able to work out formulae to remove this type of situation. If you have a development partner and you mutually agree that this type of thing should happen, you don?t call it an imposition.

? Won?t deregulation affect Ghanaians in any negative way?

A National Petroleum Authority will be set up to establish ceilings? and the band [of prices] and also to [make] a predetermination of all the things that go into the pricing process. [This will] ensure that at the end of the day, the end result is in the interest of the good people of Ghana. The second mechanism in the interest of the people will be that the Tema Oil Refinery will still be refining oil and importing crude for that purpose. So long as the Tema Oil Refinery is there, it is like an insurance. It is not just a matter of one day divesting and washing your hands off completely. Then of course, BOST [the Bulk Oil Storage and Transport Company] will be storing petroleum basically in the interest of the people of Ghana. Its capacity has been expanded to two weeks. In the future it can go up to six weeks if present facilities that are being put in place are finished. It means therefore that? assuming that [if] some oil cartel [is] formed in the process, the National Petroleum Authority can [intervene] and then bring in fuel as a short-term measure from BOST whiles the process continues again. So it is not a matter of going the full hog at one go.

? So in the absence of subsidies, how much should Ghanaians have been paying for fuel?

In the absence of market forces, it is very difficult to tell. But you can guess. If you want to guess and talk about fullness of recovery, [the price of a gallon of petrol] should have been 40,000 cedi.