The Chamber of Petroleum Consumers (COPEC) has said the June 1, 2020 pump price increases could have been prevented had the Bulk Oil Storage and Transportation Company delivered on its mandate.
Executive Secretary of COPEC, Duncan Amoah, said Monday, that although the gradual ease in coronavirus restrictions across the globe is hiking demand for petroleum products, which is pushing the prices up, BOST and the state could have shielded consumers.
“At the peak of the coronavirus pandemic, when global prices of both crude and even finished products had almost crashed, crude had declined to zero and to the negatives. At a point, it went to negative $37 per barrel for crude.
“Cargos in the United States or vessels carrying cargo had to be returned and companies that had ordered for cargo now had to pay dollars to get them returned and that is how it went to zero and negative… Some of us had proposed that we do take advantage of this declines and stock up,” Mr Amoah told Ghanaweb.com on Monday.
He surmised that had BOST stocked up, it would have been able to mop up the excess of the product in the system – which was selling for almost nothing at the time – so that subsequently when prices go up BOST would have released it onto the market at a cheaper price.
“We seem not to have taken advantage of that; if you look at why BOST has been established, the expectation was that BOST would keep strategic stock for consumers. Strategic stocks are meant to be taken in when prices are lower, then they are delivered onto the market when they are hitting the roof because you don’t want to overburden the Ghanaian.
“That function we do not seem to have seen both the state and BOST play effectively. Otherwise, we should have enough fuel around this time even to still continue to suppress whatever blow fuel prices throw at us,” he added.
The National Petroleum Authority (NPA) announced hikes in fuel prices in a release – an announcement many industry watchers say should have happened at least two weeks ago.
The upward review of the prices took effect from Monday, June 1, 2020 and was partly due to the 100% increase in the BOST margin – from 3 pesewas per litre of the finished product to 6 pesewas.
The 6 pesewas that will now be charged consumers on each litre of diesel or petrol along with the other factors, will work up to about 5% increase at the products at the pumps, according to COPEC’s projection.
The NPA explained that the decision to increase the BOST margin was taken by Cabinet and communicated to them via the Ministry of Energy.
Although the increase in the recent fuel price is due to the BOST margin, COPEC’s Duncan Amoah said the depreciation of the cedi against the major trading currencies and the almost 90 per cent increase in demand for petroleum products currently, are major factors that have driven the prices of fuel up in Ghana.
Many consumers believe the timing of the price hike was bad because of the economic disruptions that have been caused by the coronavirus pandemic, but COPEC says all is not lost.
While admitting that the current balance sheet of BOST will make stockpiling the commodity difficult now, as prices are still relatively low, the government can intervene.
“If the state will give it a certain lifeline, and put adequate security on these products so that the products don’t come in and as usual they either get lost in the system or somebody plays whatever games they play with them, then we all lose.
Duncan Amoah has urged the government to resource BOST because prices of fuel products are likely to go up even more.
He said it will be useful for the government to resource BOST to stockpile the crude when the price of crude oil was hovering around $30 a barrel.
“We just need to plan for the Ghanaian,” he admonished.