Industry watchers argue that consumers risk being shortchanged, if the regulators fail to regulate the application of the levy.

The comments come in the wake of marginal rise in the prices of petroleum products for the first two weeks (1^st to 15^th) of February 2018.

This is the second time in a row that consumers have had to pay a little more for fuel at the pumps.

The first occurred with the second pricing window in January 2018.

Checks by Citi Business News for instance show that major oil marketing companies such as Total, Goil and Shell have increased their prices by some 4 pesewas; to 4 cedis 67 pesewas per litre each of diesel and petrol.

Price stabilization levy overstayed?

The price stabilization levy was first applied in December 2017, as a windfall tax.

At the time, the decision was to cut down on the supposed excessive profits to be made by the Oil Marketing Companies (OMCs) due to the continuous drop in oil prices on the global market.

All things being equal, the government is expected to phase the levy out by the end of this month – February 2018.

But the Principal Research Analyst at the Institute of Energy Security (IES), Richmond Rockson tells Citi Business News the failure to come out with a successive plan, leaves much anxiety among consumers.

“In December, the government said it is putting in place the mechanisms for three months but we were of the view that this is not sustainable as it could only last as a temporary measure. But we need a long term solution which is to review the price build up and that is where all the price components are derived,” he asserted.

The Executive Secretary of the Chamber of Petroleum Consumers, Duncan Amoah couldn’t agree more to this.

In his view, the swiftness in introducing the levy has not been the same regarding concerns by industry and consumers on how the marginal rise in prices of crude oil is affecting the ordinary Ghanaian.

NPA yet to respond

The National Petroleum Authority (NPA) is yet to comment on the matter.

In the meantime, the groups want government to review major tax components that have been slapped on the price build ups of petroleum products to bring relief to consumers.

COPEC embarks on demonstration

In a related development, COPEC is embarking on a demonstration on Wednesday, February 7, 2018 to protest the persistent hikes in the prices of petroleum products.

The demonstration, is in collaboration with the Industrial and Commercial Workers’ Union (ICU).

It will culminate in presenting a petition to the Ministries of Energy and Finance, Parliament and the Office of the President.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Consumers demand disclosure on petroleum price stabilization levy appeared first on Citi 97.3 FM - Relevant Radio. Always.

However, a swift intervention from government through the National Petroleum Authority (NPA)’s price stabilization mechanism could keep prices stable.

The Institute of Energy Security (IES) which revealed this, further attributes the development to the constant rise in crude oil prices which is currently selling at 69 dollars per barrel on the international market, among other factors.

“Crude oil prices have gone up on the international market and it is still rising; as we speak the cost of a barrel of oil is averaging around 69 dollars from a previous average of 67.7 dollars. That’s a rise of about 2 percent. The finished product that’s gasoline and gas oil prices have also gone up on the international market,” Principal Research Analyst at the IES, Richmond Rockson told Citi Business News in an interview.

Consumers have had to pay more at the pumps last month (January 2018), due to rise in oil prices and the cedi’s marginal depreciation.

Currently, a litre each of petrol and diesel is selling at 4 cedis 62 pesewas at some major fuel stations.

Mr. Rockson explained the trend of the fuel price stability to Citi Business News.

“In the first pricing window of December 2017, government reduced the price stabilization recovery levy in the price build up from 10 pesewas to 3 pesewas, that’s a 70 percent reduction. In the second pricing window of December, it moved from the 3 pesewas up to the 7 pesewas. That means the subsidy was just about 3 pesewas. In the first pricing window of January, government applied it to the increment that was supposed to be experienced by consumers. That was just about 4 percent. Most of the OMC’s did not increase prices at the time.  But in the last pricing window, it wasn’t enough so prices went up at between 25%,” he explained.

But Richmond Rockson says prices will go up again should government not intervene.

“So in this particular window, for the first pricing window of February if government intervenes in the price stabilization mechanism, then definitely that means prices that are supposed to go up will be absorbed by that levy. If government does not intervene, we are expecting that prices will go up by about 2 percent” he asserted.

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By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana

The post Fuel prices to rise by 2% in February – IES  appeared first on Citi 97.3 FM - Relevant Radio. Always.

The refinery, which resumed operations on January 2, 2018, experienced a forced shutdown on January 18, 2018.

The IES attributed the shutdown to non-compliance to procedures and practices, and alleges technical and operational lapses, factionalism, vindictiveness, mismanagement, absence of teamwork and lack of due diligence, which the energy think-tank said have consumed TOR, causing financial loss to the state.

Principal research analyst of IES, Richmond Rockson made these allegations in a statement, but Dr Kingsley Antwi-Boasiako, head of Public Affairs of TOR, described the accusations as pure falsehood which should be disregarded by the public.

“We can categorically say that there is no leadership crisis at TOR.

We are working together as a team and we would be happy if people would stop peddling such falsehood about the refinery,” Dr Antwi-Boasiako stressed.

According to him, all the information put out by IES are inaccurate and incoherent.

But, Rockson said, two weeks after the start of the refinery, a leakage was detected in the stabiliser reboiler (heat-exchanger E-19), forcing the Crude Distillation Unit (CDU) to go a week without stabilisation.

“Normally, when crude oil is fed into the CDU, it should take about four hours to warm up, break circulation at 200°C and attain transfer temperature at 345°C for distillation to begin.
“And anything beyond four to five hours distorts the crude’s yield pattern.

Strangely, it took about one week to stabilise the plant for optimum distillation, causing Liquefied Petroleum Gas (LPG) to mix with naphtha, leading to loss of 280,000 litres of LPG.

“Subsequently, the plant was forced to shut down due to excessive pressure rapturing the Residue Air Cooler (EA64), adding to the financial loss caused the country as a result of last year’s explosion,” Rockson explained.

IES asks questions.

IES asked questions such as: Was a thorough post-turnaround test carried out before re-starting the refinery’s CDU? Was the pressure indicator of Residue Air Cooler working? Was log-sheet kept? And how well are the operations, monitoring and maintenance of the refinery being carried out?

Rockson stated that one would have thought that lessons were going to be drawn from the furnace (F61) explosion at TOR about 12 months ago.

Unfortunately, he said, management of the refinery appears not to have learnt any lesson from the January 26, 2017 incident that destroyed property and nearly took lives of the refinery workers.

IES said recent happenings at TOR call for immediate action, and is, therefore, calling on the government to, as a matter of urgency, “address the leadership crisis at TOR.”

Ageing equipment and failure to undertake three consecutive turnaround maintenance since 2011 took a heavy toll on the operations.

With 45,000 barrels per day capacity, TOR should be able to refine over 16 million (16,425,000) barrels of crude oil annually.

3 Turnaround maintenance missed.

By design, the refinery is expected to run continuously for a maximum of two years before it is shut down for a major maintenance of its equipment.

The last time a general shutdown turnaround maintenance was carried out was in 2009.

The general shutdown turnaround maintenance for 2011, 2013 and 2015 were not carried out because of lack of cash.

The sources said plans are far advanced to carry out general shutdown turnaround maintenance before the end of this year.

$67.7m Turnaround maintenance.

In 2010, TOR requested for $67.7 million for plant stabilisation and enhancement projects.

In response, the government in 2012 released $30 million, which was used to complete the first phase of plant stabilisation and enhancement projects on the crude distillation and residual fluid catalytic cracking units.

TOR has completed the first phase of plant stabilisation and enhancement projects on the crude distillation and residual fluid catalytic cracking units at a cost of $30 million.

A second phase of stabilisation and enhancement projects designed to ensure the reliability of operations at the refinery delayed.

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Source: The Finder Newspaper

The post TOR, IES, faceoff over forced shutdown of refinery appeared first on Citi 97.3 FM - Relevant Radio. Always.

The second pricing window period spans from Tuesday, January 16, 2018 till the end of the month.

According to the Institute of Energy Security (IES), the development can be attributed to the increase in crude oil prices, performance of the cedi, among other key pointers.

This will be the first time prices will go up since the reduction in the price stabilization levy for Liquefied Petroleum Gas (LPG) and diesel was announced by the National Petroleum Authority (NPA) in December last year (2017).

The price stabilization levy component for the two products has since been reduced from 10 to 3 pesewas.

This means the total tax component on a litre of diesel has dropped from 1 cedi 16 pesewas to 1 cedi 8 pesewas.

Also, the tax component on a litre of LPG has declined from 54 pesewas to 46 pesewas.

But the Principal Research Analyst at the IES Richmond Rockson tells Citi Business News the increase is expected looking at the current trend in fuel prices on the international market.

“Crude prices have gone up by about six percent. Finished products also went up about six percent. Our cedi has also depreciated and in the last window over the period we were supposed to have a number of increment which has not been done by the OMCs so most of them are complaining that they have already incurred losses. So in this particular window, we foresee that most of them are going to try to chip into margins to be able to make up for it otherwise they will still be making losses” he said.

Most Oil Marketing Companies for the1^st pricing window in January kept their prices unchanged.

This development was largely attributed to the relative stability on the international market.

However, if prices go up by 3 percent, it means a litre each of petrol and diesel could be sold to you at 4 cedis 62 pesewas at the pumps of major OMCs.

On the other hand, be prepared to pay about 4 cedis 71 pesewas at the pumps of some major OMCs if prices are increased by 5 percent.

Richmond Rockson says consumers are likely to pay more at the pumps for the second pricing window with the increase in petroleum prices on the international market.

“Consumers definitely are going to pay more in the next window unless the NPA or OMC’s do something; otherwise, consumers must definitely brace themselves to pay more” he added.

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By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana

The post Fuel prices to increase between 3% and 5% appeared first on Citi 97.3 FM - Relevant Radio. Always.

The energy think tank explains that, Ghana’s decision to review downwards its sulphur content for imported petroleum products, limits it from importing fuel from Nigeria.

Nigeria has for the past three weeks been hit with fuel shortages particularly in Lagos and Abuja.

The development has left commuters and drivers stranded. The government is seeking to improve its refinery system, and increase local supply going forward.

But commenting on the issue, the Executive Director for ACEP, Benjamin Boakye, told Citi Business News that the move will least affect fuel supplies in Ghana.

“It is a unique situation for Nigeria; I do not see a direct implication on Ghana particularly when we have moved away from the product specification that defined the region. In the past we had similar range of products and therefore Nigeria was driving the market so what was going through Nigeria same time could have reached Ghana, Togo and Benin and sometimes Ivory Coast and so we had one cargo moving throughout the sub-region.”

Mr. Boakye however explained to Citi Business News that the absence of a robust system to improve local production and supply of refined products, could have triggered the massive impact of the shortage.

In his view, the government should work to improve the local base so as not to lose the hindsight benefit of its local content laws.

“I think Nigeria is trying to implement some aggressive local content rules which it intends to take some market away from the big players and I think that is the implication of having an aggressive approach when you do not have strong indigenous companies to drive the market. So it must ensure that consumers and do not suffer from something that is well intended,” he further asserted.

Nigerian authorities to the rescue

Bloomberg reports that the Nigerian Vice President Yemi Osinbajo on Christmas Eve made a surprise visit to petrol stations in the commercial hub Lagos, where motorists had been queuing for hours as the nation grappled with a fuel crisis.

The government and the Nigerian National Petroleum Corporation are working to address the issue “as quickly as possible,” Osinbajo was cited as saying in a statement emailed by his office on Monday. “People have gone through a lot of pain and anguish in the past few days, and that is deeply regretted.”

Revamp TOR to save Ghana from similar fate

In a related development, the Institute of Energy Security (IES) has impressed on the government to work to improve Ghana’s local supply of petroleum products.

In IES’s view, the reduction in imports will largely hinge on the ability to revamp operations of the Tema Oil Refinery (TOR).

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Nigeria’s fuel shortage won’t affect Ghana – ACEP appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to the think tank, despite assurances that the numerous taxes imposed by the previous administration which the New Patriotic Party (NPP) had described as nuisance taxes, would be scrapped, the new government only “abolished the excise duties which was just two pesewas”, and reduced the petroleum tax by a negligible percentage in the first budget.

[contextly_sidebar id=”OugAYqoEGkJ74uwtpWVdgn4L7NG64qjG”]Speaking to Citi News, a Senior Research Analyst at the Institute, Richard Rockson, said they expect wholesale and significant reductions in the taxes and levies when the budget is read in Parliament by Finance Minister, Ken Ofori Atta.

“In opposition, the government complained, along with us that some of these taxes and levies were extravagant and were on the high side and we’re expecting that once the second budget is coming into force, government will be able to look at that,” he said.

“We don’t want what happened in the first one to happen again where government abolished the excise duties which was just two pesewas, and reduced the petroleum tax from 17 percent to 15 percent. We want a comprehensive review of these taxes and levies so that we give some respite to the people of Ghana.”

Fuel prices went up a number of times this year before hitting an all-year high in September, with petrol selling at an average of GHc4.29 at the pumps, and diesel going for an average of GHc4.23 per litre.

Some NPP communicators have suggested that a number of taxes will be reviewed downwards, with the President of the Republic, Nana Addo Dankwa Akufo Addo, hinting over the weekend that electricity tariffs will be reviewed downwards soon.

The high electricity tariffs were a major part of the New Patriotic Party (NPP)’s campaign ahead of the 2016 elections, with many of the party’s communicators claiming that electricity cost more than rent.

“I’m glad that businesses are no longer burdened by the erratic power supply that wrecked our nation in recent years. Dumsor, thank God, appears now to be the thing of an unlamented past. Another of the stars of the government, the Energy Minister, Boakye Agyarko, is to be commended for the sterling work he’s been doing so far on this matter,” the President said.

“Furthermore, the government is moving to set in motion the process for the review of electricity tariffs and in the budget to be read by the brilliant Minister of Finance, Ken Ofori-Atta on Wednesday, I’m sure we will hear some good news in this regard.”

Come clean on revenue

The Institute also called on the government to publish details of revenue accrued from the taxes and levies on petroleum products and the oil find, and the expenditures made from those finances.

“We expect government to be able to come clean when it comes to the taxes and levies on the petroleum sector, especially the fuel price buildup; how much it has accrued in 2017 alone, what it has used the funds for. We expect some level of transparency in the sector. We expect government to publish revenues that we’ve had and we want to know what government has used our oil revenues for over the period.”

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By: Edwin Kwakofi & Sixtus Dong Ullo/citifmonline.com/Ghana

The post IES wants comprehensive review of petroleum levies in 2018 budget appeared first on Citi 97.3 FM - Relevant Radio. Always.

Currently, data from the National Petroleum Authority shows that there are about 10 different kinds of taxes and levies on petroleum products.

Speaking on the Citi Breakfast show, a principal research analyst at IES, Richmond Rockson, argued that the adverse effect of the increment in fuel prices on consumers could be minimal if government scraps some of the taxes.

[contextly_sidebar id=”KakJOmtQ4k59VJ0ZF7r4i7EY8UqIstNb”]“The first thing that should go is the special petroleum tax. I don’t think that there is any need for government to impose 15 percent there. There is no point in that. Some of them can also be reviewed; I don’t see why the road fund should be 40 pesewas, it’s too much. The price stabilization and recovery levy must also go, especially when government is passing the cost on to consumers. There is no point keeping that in there as well,” he added.

Current figures from some fuel stations show that, prices of petrol and diesel have hit an all-year high, with petrol selling at an average of GHc4.29 at the pumps, and diesel going for an average of GHc4.23 per litre.

Mr. Rockson attributed the increment on the surge in crude prices on the international market as well as the depreciation of the Ghanaian currency – the cedi.

“When it comes to fuel pricing we know that there are a number of indicators that we all look at – one of the critical things that we look out for is our cedi, thus the exchange rate as compared to the dollar. Over the period, the cedi has been depreciating marginally and from May till date – ten consecutive windows—it’s only one [window] that we had a stable currency. In all the other nine, the cedi depreciated and we’ve been mentioning this every time. As we speak, the average exchange rate is 4.48 pesewes from a previous average of 4.44 pesewes, and this is really troubling because the effect it has on fuel pricing is that, it’s going to push prices up instead of pushing it down.”

He said “crude oil prices have also surged” adding that “as we speak, we are doing about 55 dollars from a previous average of 52 dollars per barrel, a depreciation of about 3%.”

“For a benchmark for finished products for gasoline and gas oil, they’ve also gone up, in this particular window they went up by 14% for gasoline and for gas oil it went up by 8%. This is what has accounted for the increment in this month [September],” Mr. Rockson explained.

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By: Godwin Akweiteh Allotey/citifmonline.com/Ghana
Follow @AlloteyGodwin

The post Scrap taxes on fuel to reduce prices – Energy Institute appeared first on Citi 97.3 FM - Relevant Radio. Always.