According to the Minority, the Special Petroleum Tax must be scrapped to ensure a reduction in the price of fuel.

Speaking in an interview with a section of the media on Wednesday, Minority spokesperson on Mines and Energy, Adams Mutawakilu said there is no justification for keeping that tax because “the purpose for its introduction is no more needed.

[contextly_sidebar id=”DirzphHfghB4Pxv2QYWvB35HVQwQa3YQ”]He said that tax was introduced in 2015 to boost government’s revenue from the oil sector because prices of oil dropped from $60 per barrel to $28 “per barrel which displaced government revenue.”

“As such, President Mahama and his government thought that they should introduce what they called the Special Petroleum Tax of 17.5% with the intention that when petroleum prices rise up to 60 and above, this tax will go off. Looking at the current situation, I think that the government is taking Ghanaians for granted. In our budget, they estimated $57 is what they expect to see in terms of revenue in the oil that we sell. Today it is $63.29 when I checked this morning. Now that is beyond the expected revenue. That means the government is making more revenue than expected in terms of our domestic oil,” Mutawakilu explained.

Mutawakilu, who is also the Member of Parliament for the Damongo Constituency in the Northern Region made the call following pressure from civil society organizations on the government to reduce prices of petroleum products.

Hundreds of commercial drivers and consumers of petroleum products took part in a demonstration organized by the Chamber of Petroleum Consumers (COPEC) in collaboration with the Industrial and Commercial Workers Union (ICU) in Accra.

The demonstration was to force the government to reduce taxes on petroleum products.

NPP gov’t taking Ghanaians for granted

Mutawakilu in the interview further accused government of taking Ghanaians for granted.

“ When circumstances are tough, Ghanaians will understand you but when circumstances are comfortable, please don’t overstretch Ghanaians. They were patient when petroleum prices were low…The Vice president, then running mate, said government was insensitive and that when they come they will take off the special petroleum tax. Today we cannot say prices are low, the prices have risen and therefore there is no reason or excuse leaving this special petroleum tax as revenue. There is no reason for it unless they have changed its objective,” he added.

Govt’s revenue structure will collapse if…

But the Chief Executive Officer of the National Petroleum Authority (NPA), Hassan Tampuli, has insisted that government cannot scrap or review taxes on petroleum products downward any further.

According to him, the taxes have been incorporated into government’s revenue projections for the year and any attempt to scrap any of them could spell doom for the current revenue structure.

“You would agree with me that government has some obligations and these obligations are based on the projected revenue and the revenues that we have accrued. These revenues include the price stabilization and recovery levy. Now that lots of revenue for the government.”

“If you are saying that we should remove completely the Special Petroleum Tax, price stabilization levy among others, then you are just asking for the collapse of the revenue as far as government projects are concerned. What government is doing is in a way responding to the needs and concerns of the Ghanaian people by reducing the price figure by 3%,” he added.

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

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He maintains that consumers will continue to bear the brunt of the price hikes despite attempts to review the mode of calculating the tax.

Dr. Wereko Brobby’s comments follow the National Petroleum Authority (NPA)’s claims justifying the continuous imposition of the Special Petroleum Tax despite appeals to remove it.

Speaking on the Citi Breakfast Show on Wednesday, Dr. Brobby said,

“What happened in 2016 was very simple, because crude oil prices had gone down, the then Minister of Finance, Seth Terkper introduced the special petroleum tax. At the time, many people complained against it including the current Deputy Minister of Energy in charge of Petroleum.”

The NPP government criticized the former Mahama administration of imposing what it described as nuisance taxes on consumers.

In an attempt to reverse the trend, the NPP administration reduced the Special Petroleum Tax by 2.5 percent.

The tax dropped from 17.5% to 15%.

But this has not gone down well with industry watchers who believe the removal of the tax will bring great relief to consumers.

Dr. Wereko Brobby also explains that removing the tax will be prudent in regulating operations in the sector.

“The NPP itself condemned the policy…the idea of reduction is not tenable; what was put in to cream off reductions that were properly due to the people should be given back and now it is getting even worse because as prices go up, the percentages are going up and it is just giving a worse effect. So none of the suggestions are tenable I should say,” he added.

The Chamber of Petroleum Consumers (COPEC), on Wednesday, February 7, 2018 embarked on a demonstration to demand the removal of the SPT and the petroleum price stabilization levy.

The exercise culminated in the presenting of a petition to the Ministries of Energy and Finance.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

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According to him, the taxes have been incorporated into government’s revenue projections for the year and any attempt to scrap any of them could spell doom for the current revenue structure.

Speaking on the Citi Breakfast Show on Wednesday, Mr. Tampuli however added that government is putting in place measures to alleviate the plight of petroleum consumers.

[contextly_sidebar id=”8ZxnyvwNnU8qUizzoKuNnq73qPxqJnEM”]“You would agree with me that government has some obligations and these obligations are based on the projected revenue and the revenues that we have accrued. These revenues include the price stabilization and recovery levy. Now that lots of revenue for the government.”

“If you are saying that we should remove completely the Special Petroleum Tax, price stabilization levy among others, then you are just asking for the collapse of the revenue as far as government projects are concerned. What government is doing is in a way responding to the needs and concerns of the Ghanaian people by reducing the price figure by 3%,” he added.

COPEC, ICU demo

The NPA CEO’s made the remark after a demonstration in Accra, organized by the Chamber of Petroleum Consumers (COPEC) in collaboration with the Industrial and Commercial Workers Union (ICU), seeking to force the government to reduce taxes on petroleum products.

Currently, a litre of both petrol and diesel goes for GHc4.62 at some major fuel stations.

This is despite assurances from the NPA that prices will remain fairly stable at the pumps.

The NPP government while in opposition also promised to scrap some taxes on petroleum taxes it described as “nuisance” taxes.

But one year after assuming office, there has been pressure on the  NPP government to honour its promises after it reviewed only a few of the taxes instead of scrapping them completely.

Response to COPEC, ICU demonstration

Responding to concerns raised by the demonstrators, Mr. Tampuli said “government is not interested in seeing that the people of Ghana go through some hardship,” hence his call that they should exercise patience.

“Whatever it is that we do, we give cushion to the Ghanaian consumers…The Minister for Energy has said it several times that government is considering different options aimed at dealing with this situation. So they should be rest assured, they have every right to demonstrate but we are saying that the reason for the demonstration is not as tenable as they want us to believe especially when the prices could have gone way higher than it has but for the intervention of government and there are records there to show,” Mr. Tampuli added.

Click below for Hassan Tampuli’s interview on the Citi Breakfast Show: 

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

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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.

The CEO of the NPA, Hassan Tampuli explains that the plan is to regulate the program and improve standards.

“There is a stage in the implementation regime; the total cylinder recall. We will recall cylinders in the system and we will trade them off and then we will retire cylinders which do not meet the safety parameters,” he told Citi Business News at the NPA’s downstream colloquium on Wednesday, January 31, 2018.

The cylinder recirculation model has become apparent due to efforts to avert fire disasters at fuel refill stations.

The program also comes on the back of a cabinet decision arrived at in October last year after the fire disaster (gas explosion) at a fuel station at Atomic Junction in the Greater Accra region in October.

Under the model, LPG Bottling Plants will be sited away from congested commercial and population centers and will procure, brand, maintain and fill empty cylinders to be distributed to consumers and households through retail outlets.

Mr. Tampuli maintains the recall which will commence by the end of this year, will be done gradually.

According to him, this is to ensure that the marketing companies are not faced with any challenge of possible shortage of cylinders with the rolling out of the program.

“The cylinder will be procured, owned and branded by the (LPG) marketing companies. So a customer will only have to take an empty cylinder to a retail outlet and get a filled one. If you want any size – if you want 3 kilos, 6 kilos, 9 kilos, 12 kilos; depending on the depth of your pocket, you can get any cylinder that you want that will meet your pocket.”

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post NPA to recall all cylinders under recirculation model appeared first on Citi 97.3 FM - Relevant Radio. Always.

This follows an earlier prediction by the Institute of Energy Security (IES) that prices will go up by between 3 and 5 percent.

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

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

Checks by Citi Business News show that a number of OMCs including Total have increased the prices of fuel at the various pumps for example with Total a liter of petrol is selling at 4 cedis 63 pesewas.

This is up from the previous 4 cedis, 49 pesewas recorded.

Goil, SO Energy and Shell are however yet to effect the price changes.

The Executive Director of the Chamber of Petroleum Consumers (COPEC), Duncan Amoah, however, insists consumers will be overburdened by this development, thus the NPA must step in.

“Something could be done to forestall the increases as we are seeing currently but nothing so far has been done. We went around the issues and the reality is dawning on us all. Some of the OMCs I know, clearly have made some significant losses. The cedi is not doing too badly but sadly Ghanaians are being asked to pay a lot more for petrol at this time” he lamented.

He further called on the NPA to ensure stability in fuel prices.

“We believe that the special petroleum tax component on the price build-up has gotten to a point where it has to go down completely or get re-positioned altogether in order to give some sense of stability or some reduction in fuel prices to Ghanaians,” he added.

Meanwhile, Mr. Amoah warned that prices will keep escalating should government not step in soon.

“These increases have been expected over the past one week and we are quite certain that if nothing is done there will be further increases even in the coming days because as we speak, world prices have hit above the 70 dollars and that clearly has its own consequences” he explained.

This is the first time prices have gone 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.

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By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana

The post Consumers seek NPA intervention as fuel prices rise 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.

Though they have largely lauded the move, the industry watchers have suggested the need to attract private sector participation in order to achieve the full objectives.

The comments also follow recent fuel shortage and its impact in Neighbouring Nigeria.

Finance Minister, Ken Ofori Atta gave the latest assurance of revamping the operations of the Tema Oil Refinery in December 2017.

According to him, this will also dwell largely on the collaboration between government and the private sector.

“Things are changing and by the first quarter 2018, we expect the TOR to run continuously again… the higher strategic goal is to engage local and international partners to significantly expand its storage and refinery capacity,” he stated.

TOR refinery quantities revised

The Tema Oil Refinery had since the commercial exploration of oil in 2010, been saddled with numerous challenges that have also hampered its refinery capacities.

TOR had been tipped to increase its refinery productions from 16 to 18 million barrels, but it is yet to achieve this aim.

In addition, the revision of the sulphur specification content for diesel in Ghana from 1000 parts per million to 50 parts per million, requires a robust refinery to meet the standard.

The Executive Director of the Institute of Energy Security, (IES), Paa Kwesi Anamuah Sakyi is optimistic of the plan.

But he wants Ghana to do more and tap into the benefits that neighbouring Nigeria is perhaps missing out on.

“Another assurance came from the Petroleum Minister saying that before the end of 2017, the refinery will start that one didn’t materialize…The advantage we have from Tema Oil Refinery is that the about four refineries in Nigeria are not working. So if we are able to get TOR on stream we will be able to take advantage of the Nigerian market and some West African markets as well.”

Aside welcoming the decision, the Executive Director of the African Centre for Energy Policy (ACEP), Benjamin Boakye also believes efforts must be put in place to position TOR to refine to the current 50 parts per million requirement for diesel in Ghana.

“Even now with the sulphur standards that have been implemented, that is the 50 ppm, TOR cannot refine to that standard and therefore they need capital injection to retool the plant  to make it compliant with our own regulations and laws,” he asserted.

Private sector participation

It may perhaps suggest that the government will have no option than to stick to a plan to aggressively include the private sector in meeting the relatively huge capital injection needed to hit the ambitious target as scheduled.

In Mr. Anamuah Sakyi’s view, capital injection from the private sector will dependent on assurances on Return on Investments.

“Even if government needs additional inputs into Tema Oil Refinery, it can source for this financing within the country because people are willing to invest in the refinery. If only government shows a clear path that people will have returns for investments they make into the refinery.”

Meanwhile Benjamin Boakye also claimed, “The company needs some serious capital injection which we will advise government to put in the money. So if the government is not going to put in the money, then we will advise that it calls on the private sector to inject the capital to ensure that it can be efficient and refine products in order that it can compete on the market.”

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Analysts urge private sector involvement in TOR appeared first on Citi 97.3 FM - Relevant Radio. Always.

The NPA in a statement explained that, this is “in line with a drop in crude and petroleum prices on the world market, as well as stability in the exchange rate.”

[contextly_sidebar id=”gqAS60LpAFQ0yocbJ8A99ErlSbEKTEgq”]The Authority added that, it had “activated the Price Stabilization and Recovery Levy to stem potential upward adjustment in the price of diesel.”

“The NPA wishes to assure the public of its commitment to monitor the situation in order to ensure the full benefit of the reduction is felt,” the statement further indicated.

Fuel prices hit all-year

In September 2017, it emerged that Ghanaians were paying more for petrol and diesel few months after enjoying fairly low prices.

Figures from the petroleum industry had shown that, prices of the two products at the various fuel stations had hit all time high, with petrol selling at an average of GHc4.29 at the pumps, and diesel going for an average of GHc4.23 per litre, as at the third week of September 2017.

The increase had been attributed to the marginal depreciation of the cedi, as well as increased global crude oil prices due to the floods in the US which affected production at major oil companies.

IES predicts no fuel price increase

The Institute of Energy Securities (IES ) had also predicted  that consumers will not experience any significant price change at the pumps in the first pricing window of December 2017.

The Principal Research Analyst at the IES, Richmond Rockson, who made this prediction in an interview with Citi Business News explained that, despite the fast depreciation of the cedi against the dollar, the effect on petrol prices will be minimal.

“In the next pricing window which is the first pricing window in December, we foresee fuel prices remaining fairly stable, when I say fairly stable what I mean is that, we are not expecting any price change, and even if there will be a change in prices it won’t be significant”.

“The cedi is depreciating at a fast rate even though it is selling around 4 cedis 6 pesewas on the foreign exchange market. The average for the period is 4 cedis 48 pesewas, as compared to the previous average of 4 cedis 41 pesewas”

He explained that, the depreciation of the cedi would reflect in a price change of less than one percent for petrol, and therefore will be insignificant.

“Virtually a depreciation of 1.5 percent. Crude oil prices have remained fairly stable as well, and the difference is less than one percent,” he said.

NPA revises fuel prices downward through Price Stabilization levy

On December 1, the National Petroleum Authority (NPA) also directed all Oil Marketing Companies, and LPG Marketing Companies to use revised prices in the Price Stabilization and Recovery Levy Act to control recent price increases in petroleum products.

This followed a directive from the Ministry of Energy, raising concerns about the recent fluctuations in the prices of petroleum products due to strong political and economic influence from oil producing countries across the world.

In line with the directive, the Authority was expected to revise the cost of the levy which is one major component in the determination of petroleum prices.

By this, the Price Stabilization and Recovery Levy for petrol will remain at 12 pesewas per liter, while diesel and LPG are revised to 3 pesewas per liter from 10 pesewas per liter.

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By: Marian Ansah/citifmonline.com/Ghana

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It said the stability could be attributed to the marginal depreciation in the price of fuel on the world market.

[contextly_sidebar id=”2oBVzRXJit8eFr2XAMPXAxdgRr6DyzTC”]”The Authority wishes to advise the general public that prices of petroleum products at the pumps are expected to remain stable over the pricing window, 16th December to 31st December 2017….This is as a result of a marginal drop of fuel prices on the world market. The Exchange Rate has also remained relatively stable,” it said in a statement copied to citifmonline.com.

The NPA added that it had activated price stabilization measures in view of the situation to ensure that petroleum product prices are not increased.

“In line with a directive from the Ministry of Energy, the Authority has activated the price stabilization mechanism to avoid any upward adjustment in prices…. the Authority has therefore adjusted the PRICE STABILIZATION and RECOVERY LEVY (PSRL) on Diesel and LPG. This adjustment will not result in any price increment.”

IES predicts no fuel price increase

The Institute of Energy Securities (IES ) had earlier predicted the stability in petroleum product prices.

According to the Principal Research Analyst at the IES, Richmond Rockson, who spoke to Citi Business News, despite the fast depreciation of the cedi against the dollar, the effect on petrol prices will be minimal.

“In the next pricing window which is the first pricing window in December, we forsee fuel prices remaining fairly stable, when I say fairly stable what I mean is that we are not expecting any price change and even if there will be a change in prices it won’t be significant,” he said.

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By: Jonas Nyabor/citifmonline.com/Ghana

The post No change in fuel prices during Christmas period – NPA appeared first on Citi 97.3 FM - Relevant Radio. Always.