NPA Explains Fuel Price Rise

moses Asaga CEO NPAThe  National Petroleum Authority (NPA), has said the 23 per cent increase in petroleum prices was necessitated by the removal of subsidy, the rise in crude oil price on the international market and the depreciation of the cedi.

Speaking to The Ghanaian Times in a telephone interview yesterday, to throw more light on the increase, the Chief Executive Officer of the NPA, Mr. Moses Asaga, said: “First of all the commodity price in the last three months has increased, and also refined products from the North West European countries has also been increased, and these two factors greatly accounted significantly for the adjustment”.

Mr. Asaga said the depreciation of “the local currency against other foreign currencies has also affected the prices of petroleum products.”

He said in view of those factors, the NPA had decided to cut down subsidies on petrol, gasoline, kerosene and aviation fuel, which had been “big subsidy areas that the government had been handling for the past two years”.

He said even though the government had been subsiding crude oil for the past two years, it has been realised that it could not be sustained.

Mr. Asaga said the NPA has decided to re-introduce the automatic adjustment formula, adding that, “Fuel prices will be reviewed on a quarterly basis”.

He said under the automatic adjustment formula, price adjustments would be based on transatlantic shipment freight charges, and the cedi and dollar exchange rate, among other external factors that may be relevant.

He said, nonetheless, premix fuel was still being subsidised by 50 per cent, adding that residual oil which was being used by industry, was also being heavily subsidised.

About two weeks ago, Mr. Asaga hinted of the NPA’s intention to advocate the removal of subsidy on petroleum products following an acute shortage of the products in most parts of the country, especially in Accra.

The shortage was as a result of government’s indebtedness to the Bulk Oil Distribution Companies (BDCs) to the tune of GH¢304 million.

The shortage generated discussions on the payment of fuel subsidies among consumers who expressed their willingness to pay for the full cost of petroleum prices. By Matthew Ayoo

 

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