Page 10 - AfrOil Week 11 2020

AfrOil POLICY AfrOil
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Even though the price of Brent grade crude has fallen by more than 40% since the beginning of the year, it said, Ghanaian consumers have only seen a minimal drop at the pump.
Gasoline is now selling for GHC5.38 ($0.97) per litre, down from GHC5.62 ($1.01) per litre as of January 1, it noted. This represents a decline of less than 5%, which the statement described as “an insignificant and paltry reduction.”
Under these circumstances, said Sammy Gyamfi, NDC’s national communication officer, consumers deserve nothing less than a 20% price cut.
“Anything short of this should be fiercely rejectedbytheGhanaianpeople,”hewasquoted as saying in the statement. “This, we believe, will reduce the extreme economic hardship in the country and ameliorate the plight of suffering Ghanaians.”
NDC was not alone in its call for price cuts. Ghana’s Chamber of Petroleum Consumers (COPEC) declared on March 10 that a reduc- tion of 10-32% was in order, in light of falling crude oil prices. “It is our expectation in the coming few days that the various oil marketing companies ... will ensure the Ghanaian [con- sumer] is given nothing but the full benefit of these sustained reductions in fuel prices on the international market,” the group said in a statement.
Nigeria
Meanwhile, the Major Oil Marketers Associa- tion of Nigeria (MOMAN) has begun pushing the government to respond to the decline in crude prices by revising exchange rates. Last week, the group asserted that its members would be able to resume imports of gasoline if Nigeria’s national currency were to trade at 306 naira per dollar, compared with the current rate of about 368 naira to the dollar.
MOMAN’s member companies have refused to import gasoline for more than two years, say- ing that oil prices are too low to do so profita- bly. This has left state-owned Nigerian National Petroleum Corp. (NNPC) as the country’s only supplier of imported gasoline.
According to MOMAN’s chairman, Adetunji Oyetunji, the government has other options, such as instructing the Petroleum Products Pricing Regulatory Agency (PPPRA) to increase profit margins on petrol. The PPPRA’s current pricing template sets margins for retailers at NGN6.0 ($0.016) per litre and for wholesalers at NGN2.36 per litre ($0.0064). The agency also sets an allowance of NGN3.36 ($0.0091) per litre for fuel transporters.
“We call on the government to seize the opportunity of these lower oil prices to either give us an immediate margin increase or remove subsidy [on exchange rates] because today, the landing cost of petrol is much lower than the approved pump price,” Oyetunji said. “So it gives a unique opportunity to be able to get out of this subsidy business. It happened like that in 2016, when oil prices dropped significantly, but we
didn’t seize that opportunity.”
Angola
In Angola, government officials have been the ones to call for revisions to fuel pricing policies. On March 13, Finance Minister Vera Daves told reporters that Luanda intended to elimi- nate subsidies for motor fuels. She did not say when this change might take place, saying only that the government had not taken this step yet because it wanted to make sure that the new policy had an impact on consumers that “was as
small as possible.”
Lifting the subsidies will help the national
oil company (NOC) Sonangol, as the subsidies have imposed constraints on downstream rev- enues, she said. This, in turn, will help the gov- ernment, as it will put the company in a higher tax bracket, she added.
Additionally, Daves said, the policy change will discourage cross-border fuel smuggling. Speculators have long been taking advantage of Angola’s low domestic prices, buying fuel locally and then selling it for higher prices in neigh- bouring countries, she explained. Currently, Angola’s government spends about $3.5bn per year to keep domestic fuel prices artificially low.
Kenya
In Kenya, the Energy and Petroleum Regulatory Authority (EPRA) has authorised a slight reduc- tion in petroleum product prices.
On March 14, the agency said that it had brought down the price ceiling for gasoline by KES2.0 per litre, for diesel by KES2.8 per litre and for kerosene by KES7.23 per litre. It explained the cuts by noting that the price of imported gasoline had dropped by 3.44% to $0.47259 per litre in February, while diesel had slipped by 5.2% to $0.48021 per litre and kero- sene by 14.96% to $0.42124 per litre.
The new pricing schedule will remain in place from March 15 to April 14, the EPRA said. The agency conducts a monthly review of prices for refined petroleum products. Its decisions have a significant impact on the economy, as refined fuels account for about 25% of Kenya’s total imports. ™
Angola has kept domestic fuel prices artificially low (Photo: Sonangol)
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w w w . N E W S B A S E . c o m Week 11 18•March•2020