The Chamber of Petroleum Consumers (COPEC) has alerted the public to expect higher fuel prices at the pumps in the coming weeks due to the depreciation of the cedi.
This warning follows recent price hikes by some oil marketing companies, contradicting earlier projections that prices would drop from mid-May. The companies attributed these increases to uncertainties in the exchange rate market.
As of Tuesday, May 21, 2024, the dollar was selling for GH¢15.20 at Forex Bureaus. Duncan Amoah, the Executive Secretary of COPEC, stated that oil marketing companies are struggling with exchange rate volatility.
He noted that while some companies are seeking innovative ways to mitigate the impact of the cedi’s depreciation, the ongoing instability is making it difficult for them to plan effectively.
“Once you have a currency that you can’t predict its performance in the next two to three months, then you are forcing the importers to determine what values to set their pricing.”
Duncan Amoah
He stressed that business owners will always respond to market expectations and base their forecasts on the currency’s performance.
“If the importer is done selling his fuel, he has to pay the suppliers. He needs more cedi than he did when he was setting the price. A certain overrun may have occurred.”
Duncan Amoah
Mr. Amoah explained that importers face increased costs because they require more cedis to purchase the same quantity of dollars they initially used for importing the product.
“So clearly, something must be done and the government has a duty to ensure the stability of the cedi”, he said.
He further pointed out that the performance of the cedi and the international market sales of various finished petroleum products have significantly influenced fuel prices at the pumps.
However, despite the cedi’s depreciation, most oil marketing companies have chosen to keep prices unchanged since last Thursday, May 16.
Another significant player in the industry, Allied Oil, stated that while it will increase its prices, it will remain below the 14 cedi mark.
NPA Introduces New Floor Price
The National Petroleum Authority (NPA) introduced a new price floor for oil marketing companies and other entities selling petroleum products from May 15 to May 31, 2024, covering the first pricing window of the month.
Under the updated pricing, the floor price for diesel was increased to GH₵13.15 from the previous GH₵13.07. However, the price floor for petrol experienced a slight decrease.
According to the new regulations, no oil marketing company should sell a liter of petrol for less than GH₵13.60, down from the previous price of GH₵13.63.
Additionally, the NPA mandated that a kilogram of Liquefied Petroleum Gas (LPG) must not be sold for less than GH₵12.30, up from the previous floor price of GH₵10.55 set for the period from May 1 to May 15, 2024.
The NPA’s price update reminded all industry players, including oil marketing companies, to strictly adhere to the new pricing guidelines.
This price floor announcement applies to the second pricing window for petroleum products, which runs from April 16 to April 30, 2024.
The National Petroleum Authority introduced the price floor mechanism to check price undercutting in the industry. It stated that the practice if not checked could threaten the stability of the industry.
The program has faced criticism from some industry players, who describe the policy as anti-free market.
However, the NPA maintains that the price floor policy was implemented following industry consultations and recommendations on addressing price undercutting.
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