Fuel prices in Ghana are set to rise from June 1, 2024, due to the depreciation of the Ghana Cedi against the US Dollar, despite declining international market prices for petroleum products.
According to the Centre for Environmental Management and Sustainable Energy (CEMSE), international prices for Gasoil (Diesel), Gasoline (Petrol), and LPG have all fallen. Specifically, Diesel dropped by 4.87% from $888.81/MT to $845.50/MT, Petrol by 1.65% from $756.28/MT to $743.80/MT, and LPG by 6.2% from $460.64/MT to $432.10/MT, based on observations from international commodity trading platforms between mid-May and early June.
However, the Ghana Cedi depreciated by 3.06% against the US Dollar from Ghc13.883 to Ghc14.32, as noted by the CEMSE. This indicative rate, dated May 15, 2024, contrasts with current market rates from major banks: GCB Bank at Ghc14.88/$, Fidelity Bank at Ghc14.85/$, and Stanbic Bank at Ghc14.995/$. The Chamber of Bulk Oil Distribution Companies (CBOD) projects an even higher depreciation of 7.4%, with future exchange rates between Ghc14.90/$ and Ghc15.10/$. Consequently, Bulk Import, Distribution, and Export Companies (BIDECs) might use rates between Ghc15.50/$ and Ghc16.10 to set petroleum prices from June 1, aiming to safeguard profitability and mitigate future forex losses.
Expected Price Increases
Diesel: Prices are forecasted to rise by 3%, ranging from Ghc14.38 to Ghc15.14 per litre, depending on the efficiency of Oil Marketing Companies (OMCs).
Petrol: Expected to increase by 3%, with prices between Ghc14.10 and Ghc15.20 per litre.
LPG: Prices likely to remain stable or increase by 1%, selling between Ghc15 and Ghc16 per kg.
OMCs like STAR OIL, ZEN PETROLEUM, and ALLIED OIL are expected to price their diesel and petrol around Ghc14 per litre, while VIVO (SHELL), GOIL, and TOTAL may price theirs around Ghc15 per litre.
Conclusion and Recommendations:
The surge in fuel prices is attributed to the Cedi’s depreciation rather than international market prices. To mitigate future price increases, the following measures are recommended:
1. Increase Forex Allocation: The Bank of Ghana should boost its forex allocation to BIDECs from 25% to 80%, mandating these companies to use an average of auctioned and market rates to set fuel prices, potentially reducing ex-pump prices by 50 pesewas per litre.
2. Deregulate Transport Pricing: The NPA should consider deregulating the Unified Petroleum Price Fund (UPPF), allowing market-driven transport pricing, which could also reduce ex-pump prices by 50 pesewas per litre.
3. Remove LPG Fee: The NPA should halt the $80/MT fee introduced on LPG in April 2024, potentially decreasing LPG prices by about Ghc1.80 per kg.
These interventions aim to curb escalating fuel prices in upcoming windows, especially with projected international market price surges.
Below is the press release from CEMSE:
