Time will justify decision on fuel prices

The benefits that would be derived from paying the right price for petroleum products would exonerate the government just as time had proved the decision to join the HIPC initiative to be one of the best things that ever happened to Ghanaians.

The decisions to end the under-pricing of petroleum products and to join HIPC (Highly Indebted Poor Countries) initiative were the most crucial interventions that the government had made so far and they were made regardless of their political implications for the New Patriotic Party (NPP), Mr Albert Kan Dapaah, Minister of Energy said at Bole at the weekend.

Mr Kan-Dapaah, who was speaking at a ceremony at Bole at which Vice President Aliu Mahama cut the sod to begin the reconstruction of the 53-kilometre Bole-Tinga road, in both cases the national interest, was made to override that of the party.

The stretch of the road, which is to be completed within 24 months at the cost of 45.6 billion cedis, forms part of the 106 Bole-Bamboi Road, which links the Southern part of the country to the Upper West Region.

Mr Kan-Dapaah explained that funds that were hitherto used to subsidise petroleum products would now be spent on roads, hospitals, education, health and other areas that would help to reduce poverty.

He said the under-pricing policy was costing the nation dearly as the government accumulated 500 billion cedis in subsidies in addition to the 3.4 trillion cedis it inherited from the administration of the National Democratic Congress (NDC).

"The persistent under-pricing resulted in the Tema Oil Refinery (TOR) accumulating a debt that currently exceed the primary capital of the entire banking system of the country, which is two trillion cedis. This poses a systemic risk to the whole banking sector," he said.

Mr Kan-Dapaah said considering that 50 per cent of vehicles in the country were private cars, it was morally unfair to ask those who queued for hours at the various lorry stations to continue to subsidise those who rode in their own cars.

"If we save the money on subsidies for the construction of roads like the Bole-Bamboi road posterity would appreciate it because the benefit will be evident. However, if we continue with the subsidy future generations would curse us for making a bad choice."

He recalled the criticisms and condemnation that followed the decision to join the HIPC initiative, saying they were made out of ignorance on the national economic situation at the time.

"Now that the benefits have started coming and every district assembly has received at least one billion cedis, we have been proved right."

He explained that it was not the NPP that classified Ghana as HIPC. That was the status of the nation in 2001 because when its money was to be shared among the citizens each person would have received between 350 to 390 dollars.

"Countries that are classified as HIPC are those whose citizenry would get less than 600 dollars if their money is to be shared among them," he said.

Mr Kan-Dapaah said the only option left for the government at the time was to raise taxes to do projects and that was deemed right.

He said the budget prepared for 2001 by the NDC showed that total revenue receipts for the year was to be 13.8 trillion cedis, while the total external debt was 4.4 trillion cedis, internal debt was two trillion cedis and wages and salaries for government workers were to take 2.6 trillion cedis. Additionally, revenue for Administration was 800 billion cedis.

"All these amounted to 9.8 trillion cedis, leaving us with only four trillion for education, road, health and other projects," he said, adding that the decision to join HIPC was, therefore, inevitable.

President John Agyekum Kufuor also justified the need to pay realistic prices for petroleum prices in his State of the Nation Address to Parliament on Thursday, saying the need to break away from this precarious situation informed the recent near 100 per cent hike in petroleum prices.

He observed that the past year had been full of challenges making the government to start the first quarter of this year with many difficult decisions in its determination to establish a firm foundation to accelerate the economic transformation of the country.

"This is why after the nation talked about malfunctioning of the economy for a long time, agonised about the difficult measures that can fix it for many years, and yet tried to dodge taking the hard decisions for so long, it is now having to bite the bullet in a last ditch stance to free the economy for real growth," the President said.