Fuel Price to go up next week with 20%

Information reaching newsmen indicates that the ex-pump prices of fuel would see an upward adjustment across the country by next week. 

This increment would further worsen the plight of the Ghanaian who is already saddled with the added burden of freshly announced tax hikes contained in the 2011 budget. 

The National Petroleum Authority (NPA) is set to increase fuel prices by 20% as a result of hikes in crude oil prices on the world market. 


A barrel of crude oil is currently selling at $85.17. 

The impending price increases brings to question the NDC government's decision to hedge the purchase of the country's crude oil as experts have raised questions over the negative cost implications associated with such a transaction. 

It can be recalled that on the 25 th of August 2010, the Mills-Mahama led NDC Government decided to hedge the purchase of the country's crude oil on the world market. 


This followed recommendations by a Cabinet Committee charged to work out arrangements for the hedging of the country's crude oil purchases. 

The decision to hedge was expected to insulate the country from crude oil price volatility on the international market and Government is estimated to have spent between $30 to $60 million to finance the whole hedging arrangement. 

At the time government decided to hedge, Dr. Nii Moi Thompson, an economist, said “Hedging is a risky business and as such the government has to tread carefully since the nation could lose several millions of cedis.” 

In October 2010, experts at the World Bank/IMF annual meeting warned that Ghana's decision to hedge a barrel of oil at $82.50 for the next six to 12 months could have dire consequences on the fragile economy. 

They were of the opinion that if the government hedged the price of oil at $82.50 per month for the next six to 12 months, then Ghana could lose as much as $45 million for 2011. 

The $45 million that the government was likely to lose to hedging was about a quarter of the total budgetary allocation for the agric sector for 2010, which stands at GH¢256,321,495. 

Nana Attobrah Quaicoe, Head of Research at the Danquah Institute, when contacted by The Statesman wondered what the point of hedging was. He said “The Government and National Petroleum Authority should explain to us why Ghana is losing money on hedging”. 

Aside the 20% increment next week, the ex-pump price of fuel will see an upward adjustment by an extra six (6) pesewas next year because of the 400% rise in TOR Debt Recovery levy announced by the Dr. Kwabena Duffuor as he read the 2011 budget.

source: The Statesman