The opposition New Patriotic Party (NPP) has cautioned that the government’s decision to suspend statutory margins allocated to key institutions in the petroleum downstream sector could create another energy sector debt crisis if maintained.
The party said it supported efforts to shield consumers from the impact of rising fuel prices linked to the conflict in the Gulf region. However, it objected to the use of withheld revenues from downstream institutions to finance the relief while government continues to collect existing taxes and levies on petroleum products.
“What we do not endorse is accumulating significant debt in the downstream energy sector by depriving it of the revenue it needs to function while keeping every Government tax and levy on petroleum products in place and passing this off as relief when the opposite is in fact the case,” the party said in a statement issued on Friday.
The NPP Policy Committee on Energy said the government’s GH¢2 per litre reduction on diesel prices, introduced several months ago, had effectively been financed by suspending statutory margins meant for major institutions within the downstream petroleum sector.
According to the party, the arrangement is costing the sector more than GH¢500 million, equivalent to $45.2 million, every month. When the implied support to the Unified Petroleum Price Fund (UPPF) is included, the monthly cost rises to nearly GH¢683 million.
The NPP further claimed that GH¢2.076 billion had already been withheld from the Bulk Oil Storage and Transportation Company (BOST), distributors, fuel markers and the UPPF during April, May, August and September.
“None of it has been replaced. It is being converted, quietly, into deferred maintenance, supplier arrears and institutional borrowing,” the statement said.
The statement was signed by Kojo Oppong Nkrumah, chairman of the NPP Policy Co ordination Committee.
The party warned that the financial obligations created by the intervention could eventually be transferred onto the government’s books and become public debt.
“Government is accumulating debt to BOST and other key players under the guise of ‘intervention’,” it said.
The NPP also cautioned that any further increase in international crude oil prices could significantly increase the cost of maintaining the intervention and push diesel prices beyond GH¢18 per litre despite the existing GH¢2 relief.
The party said pricing data for the September 16 to 30 window showed crude oil prices had increased from $92.11 to $98.18 per barrel, representing a 6.59% rise.
Over the same period, international petrol prices increased by 14.57%, diesel prices rose by 4.85% and liquefied petroleum gas (LPG) prices went up by 13.47%.
The NPP also said the cedi had depreciated from GH¢11.40 to GH¢11.50 against the US dollar.
“Diesel already sells in the GH¢17-plus range at the major OMCs,” the party said, referring to oil marketing companies.
“Applying the next-window movements—international diesel up 4.85% and cedi down 0.88%—to current ex-pump prices, a diesel price north of GH¢18 per litre is entirely plausible even with the GH¢2 intervention in place.”
The opposition party said Ghana had no influence over when the conflict in the Middle East would end and questioned whether government could continue financing the relief if international crude prices rise further.
“If crude moves well above US$100 a barrel, does the subsidy become GH¢3, or GH¢4? Where does it end?” it asked.
The NPP called on government to reverse the suspension of statutory margins and, instead, suspend taxes and levies imposed on fuel for as long as the current crisis persists.
“Restore the statutory margins it has raided, stop digging a GH¢600 million monthly hole in the petroleum downstream that Ghanaians will otherwise repay as a new round of energy sector debt, and suspend the taxes and levies it collects on every litre of fuel for the duration of this crisis,” the party said.