The Africa Centre for Energy Policy (ACEP) has released a comprehensive report detailing the escalating fuel prices in Ghana, attributing the surge to a significant increase in government-imposed levies and margins. The report paints a concerning picture of how these levies, while generating substantial revenue for the government, are primarily channeled towards debt servicing, leaving a meagre portion for critical development initiatives. This financial burden ultimately falls on the Ghanaian consumer, who bears the brunt of these escalating fuel costs.
The report meticulously dissects the various regulatory margins contributing to the price surge, including the BOST Margin, Primary Distribution Margin (PDM), Unified Petroleum Price Fund (UPPF), and the Cylinder Recirculation Model (CRM) margin. These margins collectively generate a staggering GHS 7.6 billion annually, a figure that has seen an alarming increase between 2019 and 2024, with percentage increases ranging from a substantial 247% to a staggering 429%. ACEP criticizes the rationale behind some of these levies, particularly the PDM, which is levied irrespective of whether the state-owned Bulk Oil Storage and Transportation Company (BOST) is utilized for transportation. This practice is deemed “disingenuous” by the report, given that a significant portion, over half, of petroleum products bypass BOST altogether, raising questions about the justification and efficiency of this levy.
The Price Stabilization and Recovery Levy (PSRL) also comes under scrutiny in the ACEP report. While a portion of this levy is ostensibly used to subsidize premixed fuel, the allocation and utilization of the remaining funds lack transparency and accountability, raising concerns about potential mismanagement. This lack of clarity surrounding the PSRL further fuels concerns about the overall transparency and efficiency of the government’s fuel pricing mechanisms.
ACEP’s report further highlights the deviation of the Bulk Oil Storage and Transportation Company (BOST) from its original mandate of strategic stockpiling. BOST has ventured into the petroleum import market through the Gold for Oil program, a move that the report suggests might be a departure from its core function. This shift in focus raises questions about the strategic direction of BOST and its impact on the overall petroleum market dynamics in Ghana.
The Fuel Marking Margin, designed to ensure fuel quality and revenue assurance, also faces criticism in the report. The proliferation of the proprietary marking chemical within the market, as highlighted by ACEP, undermines the very purpose of this levy, raising concerns about its efficacy and the potential for misuse. This casts doubt on the effectiveness of the fuel marking program in achieving its intended objectives.
Finally, the report brings to light the substantial subsidy of nearly GHS 400 million annually allocated to the Cylinder Recirculation Model (CRM), a program aimed at promoting the use of Liquefied Petroleum Gas (LPG). However, ACEP points out that this subsidy is levied on all LPG consumed, regardless of whether it is procured through the CRM or the conventional model. This blanket application of the subsidy, according to the report, raises questions about its targeted effectiveness and whether it truly incentivizes the adoption of the CRM. The report suggests that a more targeted approach might be more efficient in achieving the desired outcome of promoting LPG usage through the CRM.
In conclusion, the ACEP report provides a detailed analysis of the factors contributing to the rising fuel prices in Ghana. It points to a complex interplay of increasing government levies and margins, a lack of transparency in the allocation and utilization of certain funds, and potential inefficiencies in the implementation of programs like the CRM and the fuel marking initiative. The report calls for greater transparency and accountability in the management of fuel-related revenues and a reassessment of the effectiveness of existing policies to ensure that the burden on consumers is minimized while still achieving the government’s strategic objectives in the energy sector. The findings presented by ACEP offer valuable insights for policymakers and stakeholders to engage in constructive dialogue and develop solutions to address the escalating fuel prices and their impact on the Ghanaian economy. The report serves as a call for action to ensure a more sustainable and equitable fuel pricing regime in the country.
