Gov’t not reducing fuel prices despite fall in crude prices

Government has stated that it cannot consider reducing fuel prices despite the falling world market price of crude oil.

This was revealed by the Minister of Energy and Petroleum, Emmanuel Kofi Armah Buah in Accra on Thursday.

The National Petroleum Authority’s upward reviews in the prices of petroleum products are usually influenced by the rising price of crude oil on the international market.

The trend on the global market has reversed, but the Energy Minister said government cannot risk following that path.

He explained to that, with a major banking crunch looming over Ghana due to government’s outstanding debts to the Bulk Oil Distribution Companies (BDCs), it cannot take that risk.

The BDCs also owe various banks in the country huge sums of money, so “it is only prudent for the state to use windfalls from the current local price levels to help clear the prevailing debt.

Mr. Armah Kofi Buah also said the debt build up from under recoveries alone stands at some 400 million Ghana Cedis, a situation he said “required urgent attention to save both the BDCs and local commercial banks.”

According to the Center for Energy Research-Ghana, pricing policy direction has been a problem for the people of Ghana and the NPA.

The prices of petroleum affect every single consumer directly or otherwise, so the NPA has decided to formulate a formula for calculating petroleum prices in the country.

The effectiveness of this model is determined by prevailing market conditions. From the formula, crude oil prices, exchange rate, taxes or levies and margins are the factors that influence oil prices.

Policy regulations and activities of government, the performances of TOR, Oil Marketing Companies (OMCs) and oil trading companies all play a major part in oil price determination.

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