Executive Director of Institute for Energy Security (IES), Nana Amoasi VII, has disclosed that government’s scrapping of taxes and levies or suspension of it on fuel prices is not sustainable in dealing with soaring fuel prices globally.
According to him, although he would advise government to intervene in the escalating prices of fuel by scrapping some taxes it will only be short-lived. He however explained that every pesewa counts for the consumer and so a “shave of a pesewa“ or two will still mean a lot to them.
Government, Nana Amoasi VII insisted, has a lot of taxes, levies and margins on the same fuel. He revealed that last year for instance, a consumer could have all these “taxes sum up” to somewhere around “GHC 1.99”. This year however, he noted that these taxes are around “GHC 2.3” there about.
“If government wants to take away some of the taxes it could help, especially the special petroleum tax. It is good that we’ve seen a suspension of the price stabilization recovery levy. Maybe they can consider other taxes for removal. And remember, because crude oil is selling above $80 dollars per barrel and our benchmark price for our crude export is around $50 dollars per barrel. Then we should note that government is getting a windfall from this source. Government can use this windfall to cushion consumers, but taking away taxes or levies or suspending some of them is just a short-term measure. It’s not sustainable”.
Nana Amoasi VII
To resolve the impact of the surging fuel prices on Ghanaians, the IES Executive Director suggested that government should rather look at more “sustainable ends to cushion” consumers against the consistent fuel price hike. He also noted that they could consider making other areas of the energy sector such as BOST and TOR better.
Beating down fuel prices for consumers
The United State of America and five other world powers including China and India on Tuesday announced a coordinated effort to tap into their national oil stockpiles in an attempt drive down rising fuel prices that have angered consumers around the world. Following this, the U.S. will release 50 million barrels of crude from the Strategic Petroleum Reserve.
Commenting on this, Nana Amoasi VII intimated that what the US is trying to do is to release some of their “strategic fuel stock onto market” so there will be more supply of the oil as against demand. He indicated that this will help despite the fact that the approaching winter season will spike “more demand” for fuel.
“So, whiles the US is trying to release, we should also note that demand will still surge. And so, if it’s not balancing then of course, you don’t expect prices to come down. But if the supply is more as against the demand, then of course the economics will dictate that prices will come down”.
Nana Amoasi VII
Touching on the possibility of Oil Marketing Companies reducing their products should it go down on the global front, Nana Amoasi VII revealed that he doesn’t pre-empt fuel marketing companies who are selling to further reduce their prices.
He explained that it is a “deregulated market” and all these OMCs don’t source from the same Bulk Oil Distributing Companies. Nana Amoasi emphasized that the OMCs purchase from different BDCs and these BDCs get their products from different traders. As such, whether they got it at a “discount or premium” is another thing.
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