Business News of Thursday, 31 May 2018
Ahead of the expected increase in fuel prices, the Chamber of Petroleum Consumers (COPEC) is asking for a further downward review of the taxes placed on petroleum products.
While Ghana might have missed the opportunity to hedge petroleum prices when world prices were generally low, the chamber insists the review of the taxes will provide relief for the average Ghanaian.
“…we expect the Government to do anything within its powers to arrest the escalations at the pumps as any further shocks on world market prices or the forex in the coming weeks will likely have a very dire impact on prices and consumers eventually.”
COPEC added that the mid-year budget presented an opportunity for this.
“We further reiterate our earlier calls on the Government through its yet to be presented mid-year budget, to further consider reviews on fuel taxes especially the Price Stabilisation and Recovery Margins as well as the repositioning of the special petroleum Tax to an ex-refinery position instead of the current fixed ex-depot position amount, or a further downwards movement from the current 13% on Ex-Depot to 10% of Ex-Refinery position as the tax levels continues to remain very high, accounting for over 51% on current ex-pump prices,” COPEC said in a statement.
Parliament, In February, passed the Special Petroleum Tax Amendment Bill to reduce the levy on petroleum products by 2 percent.
The amendment came after protests against the rising cost of fuel, as well as calls from the minority in Parliament.
But some observers were left unsatisfied by this.
Institute of Energy Security said this was insignificant and needed to be scrapped altogether.
Curbing illegal trade
COPEC is also concerned with the reports of illicit petroleum trade in the country.
Speaking to Citi News, the Executive Director of COPEC, Duncan Amoah said the reported annual loss of GHc 1.9 billion due to the illegal fuel trade was an indirect contributor to the taxes.
“We have said that government should stop the illegal fuel trade… we are quite confident that if the government were blocking the illegal fuel trade, it would get a lot more revenue to be able to reduce the overburdening fuel taxes that we are all having got pay.”
The Chamber of Bulk Oil Distributors blamed persistent issues of illegal fuel trade on what it says is the weak commitment of security agencies in addressing the issue.
Its industry report noted that the illegal fuel trade cost the country some GHc1.9 billion in 2017.
Prices expected to rise again
As it stands now, Mr Amoah said he expected the prices to rise even higher because world market oil prices were going up.
“Projections are that it could even go up to about a $100 [per barrel] so it wouldn’t be surprising if prices continue to escalate, but we are hoping that the government will put in some measures immediately to arrest some of the taxes further.”
Petrol prices are expected to rise by 2.8% and diesel by 2.5%.
The new prices are expected to reflect at the pumps from June 1 though but OMCs indicate the adjustments will most likely reflect by Friday.