Ghana's growing petroleum refining capacity currently meets approximately 60% of the nation's daily fuel demand. This development, while significant for energy security, does not yet fully shield the country from global petroleum market shocks, according to Benjamin Nsiah, Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE).
The country consumes between 120,000 and 140,000 barrels of petroleum products each day. Local refineries, operating at full capacity, can supply a substantial portion of this requirement. However, Ghana still depends on imports for the remaining 40% of its petroleum needs, leaving its pricing regime exposed to international market dynamics.
This situation places Ghana within a broader economic context where energy security is a critical factor for stability and growth. The nation's deregulated pricing system means pump prices are heavily influenced by international refined petroleum product prices, the exchange rate of the Ghana cedi against the United States dollar, freight and insurance costs, and statutory taxes and levies. Fluctuations in global oil prices and foreign exchange rates therefore continue to impact domestic fuel prices, despite local refining efforts.
Mr. Nsiah emphasized that new refineries alone cannot completely insulate Ghana from international fuel price fluctuations. He stated, "At full capacity, looking at our current consumption of about 120,000 barrels a day to 140,000 barrels a day, they are likely going to do about 60 per cent of our daily demand." This highlights the ongoing challenge of balancing domestic production with global market realities.
Recent developments in both state-owned and private refineries offer promising prospects for increased domestic production. Tema Oil Refinery (TOR) recently reported a profit after tax of GHS 1.24 billion, reflecting ongoing reforms to strengthen its operations. Planned expansion projects by local refining companies, including TOR's proposed additional 100,000 barrels and Sentuo's contributions, could significantly increase domestic output. Achieving such capacity could enable Ghana to meet its entire fuel requirement and potentially export petroleum products within the West African sub-region.
The implications of these developments are significant for Ghana's long-term economic stability. A stronger domestic refining industry would reduce dependence on international pricing benchmarks, which currently exert considerable influence on local fuel prices. Mr. Nsiah recommended that Ghana gradually recalibrate its petroleum pricing framework as domestic refining capacity expands, to better reflect local refinery costs and operational realities. This strategic shift would foster a more resilient petroleum sector, ensuring fuel availability and mitigating the impact of external market disruptions on consumers and businesses across the country.