Energy Policy Analyst – Mr. Benjamin Nsiah has urged government to re-direct its dollar auction policy towards the importation and pricing of liquified petroleum gas (LPG) in the country.
According to the energy analyst, the move will address the soaring prices of LPG which have witnessed an increment from around GH¢8 per kilogram in January to GH¢15 per kilogram in the second pricing window of February 2023.
In a statement, Mr. Nsiah noted that the current prices of LPG is discouraging small businesses and households from using clean cooking methods.
“The high and unchecked surging of LPG prices is likely to reduce its consumption in 2023, negatively affecting the government’s policy target of achieving 50% LPG penetration of households by 2030, and making this deadline one of the unachieved deadlines on the LPG agenda.”
“Furthermore, households are forced to use unclean cooking fuels like firewood and charcoal due to the non-affordability of LPG – contributing to depletion of the country’s forest cover, causing respiratory diseases and contributing to climate change.”
Mr. Benjamin Nsiah
Mr. Nsiah however communicated that government’s previous interventions, including the Bank of Ghana forex auction to the Bulk Distributing Companies (BDCs) and the Gold for Oil policy through Bulk Oil Storage and Transportation (BOST), have somewhat stabilized or reduced the prices of petrol and diesel throughout 2022 and the first two months of 2023.
The policy analyst suggested that government re-directs its dollar auction policy towards LPG imports and pricing as BDCs would hardly need auction dollars to import diesel and petrol due to the Gold-for-Oil policy.
“This would have a better impact on LPG price reduction compared to the scrapping of the taxes and levies of about GH¢1.21 per kilogram, which make up approximately 9 percent of the LPG price build-up in February.
“It has become necessary to internalize the pricing of LPG and make it affordable, given the trend of international LPG prices, which has been on an upward trajectory since December 2022, rendering the impact of scrapping taxes insignificant in subsequent windows.”
Mr. Benjamin Nsiah
Central Bank Holds Fourth Foreign Exchange Auction For 2023
Meanwhile, the Central Bank of Ghana (BoG) has continued its commitment to promoting stability and transparency in the foreign exchange market by holding its fourth forward foreign exchange auction for 2023.
The auction, which saw $30 million in foreign exchange provided to Bulk Oil Distribution Companies (BDCs) at a fixed rate of GHS 12.12 pesewas per dollar, is part of the Bank’s new forward auction format, which aims to reduce uncertainty and promote price discovery in the downstream sector.
The auction, which took place on Friday, February 24th, 2023 saw 20 BDCs submit bids ranging from GHS 10.75 to GHS 12.20. This comes after the Bank’s third forward forex auction held on 14th February, 2023 saw 30 BDCs submit bids ranging from GHS 10.55 to GHS 11.2. The Central Bank plans to sell a total of $200 million to BDCs during the first quarter of 2023.
The purpose of the forward foreign exchange auction is to stabilize the market and ensure consistency in the pricing of downstream products. By offering a fixed amount of foreign exchange at a fixed rate, the Central Bank aims to reduce uncertainty and promote transparency and efficiency in the foreign exchange market.
