The Executive Secretary of the Chamber of Petroleum Consumers (COPEC), Duncan Amoah, has attributed the latest increases in fuel prices in Ghana to rising international crude oil prices and global geopolitical tensions, rather than government policy.
Speaking on the issue, Mr. Amoah said the recent escalation of tensions involving Iran and the United States had pushed up global crude oil and refined petroleum prices, with the impact being felt in Ghana’s deregulated downstream petroleum market.
“You cannot blame the government for that one. The increase we are seeing is as a result of external factors,” he said.
According to him, Ghana’s petroleum industry operates under a fully deregulated, full-cost-recovery system, meaning oil marketing companies must recover the cost of importing petroleum products and add a profit margin without depending on government subsidies.
“The market is completely deregulated, which means full cost recovery plus a mark-up. So don’t import and sell to make losses with the hope that government would have a subsidy programme in place for you to recoup anything,” he explained.
Mr. Amoah said the surge in international benchmark prices had significantly increased the cost of crude oil and refined petroleum products on the global market.
“International benchmarks are bullish as we are seeing because of the Iranian-American hostilities. Brent for some hours pushed a little above 100 again, and it’s concerning,” he stated.
He added that prices of finished petroleum products had also risen sharply, noting that products previously trading within the $850 to $870 range had now crossed the $1,000 mark.
“That should tell you that prices are simply inching upwards, and so your local market is simply responding to that movement,” Mr. Amoah said.
The COPEC Executive Secretary further explained that under the deregulated regime, oil marketing companies must adjust pump prices in line with international market trends to avoid selling below cost and accumulating losses.
“What that means is that if prices go up, the market should be careful not to sell below a certain threshold so as to accumulate losses. Because when that happens, it’s your own problem. You will go under and the state cannot do anything to help you,” he said.
He said the latest fuel price increases should therefore be understood within the context of global oil market developments and the structure of Ghana’s deregulated petroleum pricing system.
Story by Freedom Etsey Lavoe
