That National Petroleum Authority (NPA) has indicated that the decision to increase the prices of petroleum products was made in the best interest of Ghanaians.
The Chief Executive Officer of the NPA, Moses Asaga in an interview on the Citi Breakfast Show said if the increment had not been made, it would have resulted in the shortage of the petroleum products.
[contextly_sidebar id=”FaSAXwOvRGxWBVXhzddTxXm27Dyrgx0a”]“…I just want you to have confidence that we do this because we want harmony in the system, we don’t want to have long queues, we don’t want to have shortages,” he explained.
The NPA has made a 9% upward adjustment in the prices of petroleum products. The increment took effect on Sunday, May 17, 2015.
The timing of the increment has been described by many as unsuitable considering the existing power crisis which has forced many businesses and households to rely on generator sets which are powered by petroleum products.
But according to Moses Asaga, his outfit has received signals of an imminent shortage of petroleum products because most banks were gradually withdrawing their financial support to the Bulk Oil Distribution Companies (BDCS) due to government’s failure to increase prices in tandem with the world market prices.
“…so we want o forestall any imminent shortage,” he said.
He stated that since the government only made a 10% fuel price reduction in January when crude oil prices on the world market was falling; the government thought it wise not to increase the prices drastically.
Complex pricing mechanism
The NPA boss stated that the pricing mechanism for petroleum products is “a bit complex.”
“In commodity pricing, you don’t buy a commodity and come and sell it cheaper than the amount that you bought it. When you do that, you will make losses…so it’s just a balancing act,” he explained.
He remarked that the 9% increment is just a reflection of the recent price increases on Brent crude oil, diesel and petrol on the international market.
With the almost 37% and 34%, 29% and 43% increment in the prices of Brent crude, diesel, petrol and LPG, Asaga argued that government could not maintain the prices on the local market.
“It was not something that we could wish away,” he said, adding that, “when we see that subsidies are about to be accrued, then we need to do an adjustment and the adjustment that we did culminated into the 9% increase – which means 28 pesewas on petrol and 24 pesewas on diesel.”
Moses Asaga remarked that if government had maintained fuel prices, it would have led to the accumulation of “more subsidies for government so we thought that it was better to increase the price by the 9%.”
“Once you start accumulating the subsidies, then banking sector will start losing confidence in the system and especially in the BDCs that are bringing in the petroleum products and that will lead to shortages.”
He added that it is the subsidy that determines the price “and once we see the subsidy level that is how then we determine the price.”
By: Efua Idan Osam/citifmonline.com/Ghana
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