Ghana’s fuel prices could increase again this week as rising international crude oil and refined petroleum product costs continue to impact domestic pump prices. The Chamber of Petroleum Consumers (COPEC) confirmed that recent price adjustments by oil marketing companies align with global market movements.
Duncan Amoah, Executive Director of COPEC, stated that these increases are consistent with international petroleum market trends. He warned that further adjustments are likely if global prices continue their upward trajectory. This situation adds significant cost pressures on Ghanaian households, transport operators, and various businesses.
This potential price hike fits into Ghana’s broader economic narrative of vulnerability to external shocks, particularly in commodity markets. The country’s deregulated petroleum pricing system means domestic prices directly reflect international market fluctuations. This includes changes in global product prices, the cedi-dollar exchange rate, and various taxes and levies.
Mr. Amoah told Joy FM that the current prices are fair based on COPEC’s internal data. He explained that the increases reflect movements in Platts prices, which are international benchmarks for trading refined petroleum products. These products include petrol, diesel, and aviation turbine kerosene.
The implications of these rising fuel costs are far-reaching for Ghana’s economy. Transport operators have already threatened to increase fares by 30% if the government does not intervene to mitigate the impact. Such a significant fare adjustment would raise commuting expenses and the cost of transporting goods across the country, affecting inflation.
Fuel is a major operating cost for public transport providers, logistics companies, and manufacturers. Persistent increases quickly ripple through the economy, placing renewed pressure on consumer prices. This situation highlights the challenge of managing inflation in a country heavily reliant on imported petroleum products.
The Tema Oil Refinery (TOR) also faces challenges from these global price movements. Mr. Amoah indicated that TOR purchases crude oil on commercial terms at prevailing global prices. This means the refinery remains exposed to international crude prices even when processing fuel domestically.
The crude oil is also priced in US dollars, making the final cost vulnerable to both oil market changes and exchange rate fluctuations. While domestic refining can reduce some import-related costs and improve supply security, it does not automatically guarantee lower pump prices. This is because TOR must acquire crude at full international market value.
COPEC has sought clarity on whether the government supplies crude to TOR under a discounted formula. However, available information suggests the supply arrangement is strictly commercial. This requires TOR to pay the agreed price on the international market.
The consumer advocacy group urged the Ghana National Petroleum Corporation (GNPC) and the Ministry of Energy to review this arrangement. They suggested exploring whether locally produced crude could be used more strategically to reduce Ghana’s exposure to repeated fuel price increases. This policy would require careful consideration of its impact on petroleum revenue and contractual obligations.
This debate underscores a longstanding policy challenge for Ghana. Despite being a crude oil producer, Ghana imports substantial volumes of refined petroleum products due to insufficient domestic refining capacity. Even with increased domestic refining, prices remain tied to global markets. Offering discounted crude would effectively shift costs from consumers to the state or producers.