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Plans to reduce petroleum prices in February uncertain

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Plans by industry regulator, National Petroleum Authority (NPA) to start reducing prices of petroleum products substantially from the end of this month hangs in the balance.

This is what Joy Business has picked up from the National Petroleum Authority.

The NPA had said it was working to pay off some 412 million Ghana cedis  debts owed the Bulk Oil Distribution Companies (BDCs) before reducing the price of the commodity, but that may not be possible as global oil prices have begun rising again.

After a steady fall from $133 per barrel in July 2014 to about $46 per barrel in February 2015 — representing a decrease of 59 percent — the price of the commodity has begun to rise again leaving observers  to conclude that if this trend continues, the NPA would be unable to pay off all debts owed the BDCs as it had hoped to do.

Crude oil price has now risen from $46 a barrel to $52 a barrel by close of business on Friday February 13, 2015 representing 13% increase — threatening the level of windfall again expected from lowering crude oil prices.

In a press statement issued by the NPA in January 2015 to announce a 10 percent  reduction in fuel prices, the regulator indicated that it would maintain a balance position to give the consumer a reduction whiles maintaining a commitment to paying the debt owed the BDCs.

This was when crude oil was hovering around $46 per barrel as of December 2014.

If the end of February date is anything to go by, then the recent steady rise in global oil prices could throw the completion date for debts owed the BDCs out of control. 

Refined petroleum products (diesel and petrol) on the world market equally increased by 11% between the 1st  and the 13th  February 2015.

The GHC/USD exchange rate monitored from the Central Bank had also shown depreciation of about 2% since February 1, 2015.

These numbers are key determinants for NPA in determining the price of fuel in Ghana.

It would be crucial to hear from the NPA whether or not these factors would undermine their projected end of February deadline for paying off the debts owed the BDCs and whether or not consumers would soon be paying more for fuel.

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