DEPUTY MINISTER of Energy, William Owuraku Aidoo, has detailed mitigating measures taken by the Government to counteract the price surge of petroleum products, after attributing the cause to the ongoing geopolitical tensions, post-pandemic challenges, supply chain issues, and rising inflation.
Responding to questions on the floor of Parliament yesterday, Mr. Aidoo said effective April 1, 2022, the government reduced margins in the petroleum price build-up by 15 pesewas per litre for the next three months.
According him, the Bulk Oil Storage and Transportation (BOST) Company margin was reduced by 2 pesewas per litre, while the Unified Petroleum Pricing Fund (UPPF) margin was reduced by 9 pesewas per litre; the Fuel Marking Margin (FMM) was also reduced by 1 pesewa per litre, while the Primary Distribution Margin (PDM) reduced by 3 pesewas per litre, as well as providing temporary forex exchange cover for oil imports.
“To help stabilise the prices of petroleum products, the government instituted a temporary forex exchange cover for oil imports through the Bank of Ghana.
“Upon implementation, this arrangement resulted in an immediate release of $190 million through a forex exchange auction to Bulk Import Distribution & Export Companies (BIDECs) to assist them in clearing their Letter of Credits at that time,” he said.
The Deputy Minister stated that the forex exchange cover is supposed to guarantee at least 50% of the forex demand required for product imports within the arrangement duration, thereby reducing the sector’s exposure to market speculation.
“Currently, FX support from the Bank of Ghana is 30% based on the available reserve,” he said, and pointed out that under the current deregulated regime in Ghana where the government is not responsible for determining the prices of petroleum products, particularly for gasoline, gasoil, and LPG, rises in petroleum product prices on the global market and the depreciation costs of the Ghana cedi against the US dollar are passed on directly to the end-consumer.