Fuel prices could fall in the coming days, following plans by the government to zero the price stabilisation and recovery levy (PSRL) on petrol, diesel and liquefied petroleum gas (LPG) for two months.
The proposal has been approved by President Nana Addo Dankwa Akufo-Addo as a measure to cushion consumers against soaring fuel prices.
The National Petroleum Authority (NPA), which announced this in a statement yesterday, added that the authority would now work with the Ministry of Energy to quicken the legislative processes needed to make it effective.
The levy imposed 16Gp per litre on petrol, 14Gp per litre on diesel and 14Gp per kilogramme on LPG.
Reducing the levels to zero could result in the prices of the three products falling by an average of about 15Gp.
The development comes at a time when prices of the three products have been soaring, following a consistent rise in the cost of crude oil on the international market.
The price of petrol opened the year around GH¢5 per litre, but rose to about GH¢6.50 per litre in September.
It sold at about GH¢6.53 per litre yesterday.
Diesel also opened the year around GH¢4.55 but rose to around GH¢6.50 this week.
The prices of other refined petroleum products, including LPG, have also witnessed significant changes.
The Chamber of Petroleum Consumers (COPEC) had said that prices of petrol and diesel went up by more than GH¢1.80 between January and the first week of October, prompting the chamber to call for measures to arrest the persistent rise.
The NPA statement said the reduction in the PSRL to zero followed the advice the authority gave to the Minister of Energy, Dr. Matthew Opoku Prermpeh, to seek government’s intervention to mitigate the impact of rising prices of petroleum products on the world market on consumers.
“Prices of crude oil and refined petroleum products have seen sharp increases on the world market due to a rise in demand of oil globally, without a corresponding increase in supply, particularly from the Organisation of Petroleum Exporting Countries (OPEC) and its allies. Because the pricing of petroleum products in Ghana is deregulated, changes in the prices of petroleum products on the world market have a direct impact on prices at the pumps.
“The outlook of prices on the global market shows an upward trend and, therefore, there was the need to seek government’s intervention to lower the levies to cushion consumers from feeling the full impact of these rising prices,” it explained.
Furthermore, it said the PSRL was meant to stabilise prices for consumers and pay for the subsidies on premix fuel and residual fuel oil (RFO).
Nevertheless, it said, the soaring nature of prices required that the levy be “zeroed to cushion consumers. The NPA will work with the ministries of Energy and Finance to quicken the legislative processes to give immediate effect to this directive by the President”.
Reacting to the NPA statement, the Executive Secretary of COPEC, Mr. Duncan Amoah, told the Daily Graphic yesterday that while the zeroing of the levy was welcomed, it was still inadequate, given the pervasive nature of price increases this year.
He said estimates showed that the exercise would result in the reduction in fuel prices of about 15Gp across the three products, compared to the GH¢1.85 increase in prices between January and October this year.
“It is woefully inadequate, but if that is the only way to mitigate the impact of the price increases, that is fine,” he said.
He added that the projected rise in crude oil prices in the coming months could also wipe off the proposed gains, thereby neutralising the effect of the zeroing of the PSRL on consumers.
Mr. Amoah repeated the earlier position of the chamber that the PSRL had outlived its usefulness and needed to be scrapped.
He said Ghana now operated a deregulated petroleum sector, where the prices of refined products were subjected to market conditions, thereby removing under recoveries, which were the basis for the levy.
On the issue of using proceeds from the levy to subsidise premix fuel, he said Ghana was better off using different legislation to achieve that objective, instead of the PSRL.
He also called on the government to reduce the tax build up on petroleum products to help ease the ex-pump prices.