Friday March 11, 2016

Press Statement

Development Data

December 14, 2011




We have taken note of Government’s statement on the abolishing of illegal fuel price margins by the High Court. The statement is most unfortunate. In particular, the argument by Government that the removal of the illegal price top-ups will lead to higher fuel prices is deceitful.

For the benefit of the public, we quote the petroleum pricing formula made pursuant to the National Petroleum Authority Act, 2005 (Act 691):

i. CIF = Cost (FOB) + Insurance + Freight

ii. Related Charges = Off-loading cost + In-transit losses +
Inspection + L/C cost + Financial costs +
Storage cost + In-plant losses +
Rack loading cost + Operating margin

iii. Ex-refinery Price = CIF + Related Charges

iv. Ex-pump Price = Ex-refinery Price + Govt taxes and levies
+ Distribution margins

The ex-pump price is the price at which the public buy fuel at the filling station. It is important to point out that this formula was stated in court by plaintiffs and accepted
by both Tema Oil Refinery and National Petroleum Authority.

Per this formula, at current crude oil price of (US$107.71 per barrel) and exchange rate of GH¢1.61 per US dollar, a gallon of diesel for example should be sold at GH¢5.96 at the filling station. Consumers are buying a gallon of diesel at GH¢6.91 because the NPA has inserted an “ex-refinery differential” of 95 GHp per gallon.

It is this illegal price top-up that has been abolished by the High Court. The refusal by government and the NPA to comply with the court’s ruling on grounds that it will lead to
high fuel prices is mischievous and disgraceful. It is a set back to the rule of law.

There is currently no subsidy on the sale of fuel in Ghana. And the threat by government to remove subsidies from fuel prices in the face of the court ruling is laughable. We challenge government to publish the full details of
current fuel price computations. We further challenge government to publish the statement of account on the ex-refinery differential accounts.

The NPA and government should stop hiding behind the option of a court appeal to perpetuate what is clearly an illegal extortion abolished by a court of the land.

We respectfully call on civil society, especially the institutions with representation on the NPA governing board, namely, the Petroleum Workers Union, the Chamber of Commerce, and the Chamber of Mines to take keen interest in the workings of the NPA to ensure that the rule of law and the public interest are protected.

Joshua Quashigah-Sowu
Research Director







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