Fuel hikes affecting kenkey size – ICU

The Chamber of Petroleum Consumers, Ghana (COPEC-Ghana) and the Industrial and Commercial Workers Union (ICU), have asked the government to reduce the prices of petroleum products.

According to the chamber and the union, the high prices of petroleum products have resulted in the prices of foodstuff, goods and services going up, a situation that COPEC says demands immediate attention from government.

A statement signed by Solomon Kotei, Vice Chair of the Council of COPEC and General Secretary of the Industrial and Commercial Workers Union (ICU), said: “The net effect of these rampant pump price increases, is a corresponding increase in prices of foodstuff, goods and services, import duties and inflation generally, as basic necessities of life shoot up in the face of rather stagnant meagre incomes and salaries of the Ghanaian worker.

“Government, as a matter of urgency, will need to give Ghanaians some relief by reviewing the numerous taxes in the petroleum pricing build-up to bring about some stability and reductions to ease the pressures on our pockets.

“We encourage the Government to rather introduce new and ingenious ways of expanding the tax bracket to attract more revenue than the over-concentration on petroleum taxation. The government must proactively explore other revenue-generating sources for national development as the over-dependence on petroleum taxation affects every aspect of our lives and that of the economy generally because of its chain effects – not even the size and price of ‘kenkey’ is spared.”

Read full statement below…

CHAMBER OF PETROLEUM CONSUMERS-GHANA

PETROLEUM PRICE INCREASES ACROSS GHANA, PREMIX AND ENERGY BONDS; CALLS FOR REVIEW.

ADDRESS BY MR SOLOMON KOTEI, VICE CHAIR OF THE COUNCIL OF COPEC AND ALSO THE GENERAL SECRETARY OF INDUSTRIAL AND COMMERCIAL WORKERS UNION ON FRIDAY, JANUARY 26, 2018

Ladies and Gentlemen of the press and all other stakeholders here gathered, the Chamber of Petroleum Consumers, Ghana (COPEC-GH) , has invited you here today on a very critical issue that affects workers of Ghana and the ordinary Ghanaian in general-Hikes in petroleum prices, general associated hardships and the need to scale down on some of the taxes choking the current price build up.

Government after government has played politics with the pricing of petroleum products over the years with all sorts of promises to reduce the pump prices before ascending power but woefully fail because taxing petroleum has become the cheapest means of generating revenue for the country and its development. But ladies and gentlemen, what is development when the people it is meant for are squeezed and made to live under harsh economic conditions and pay cutthroat prices for petroleum products?

SCRAPPING OF SPECIAL PETROLEUM TAX

What is even troubling is that close to fifty per cent of the total cost of fuel in Ghana at the pumps is nothing but one tax or the other with the Special Petroleum Tax alone pegged at 15% on ex depot price position which currently translates into 0.53 pesewas per litre thereby meaning Ghanaians pay on each gallon of 4.5litres ; a tax burden of 2 cedis and 39 pesewas (GHS 2.39p).

Copec-Ghana considers the Special Petroleum Tax (SPT) as not only nuisance but avoidable in the face of rising prices on the world market as this tax was introduced in 2015 to shore up some revenue at the time when international market prices had dipped below $30/barrel. One wonders why this particular tax has not been scrapped altogether since world market prices started picking from late 2016, we find this particular tax very unsustainable at current levels of above $60/barrel.

The reduction by the current government of the SPT from 17.5% to 15% as was contained in the 2017 budget was simply mathematical as in reality the actual value has rather shot up over the past due to rising prices on the international market without any attempts to scale down further. We call for the immediate removal of this particular tax and others as contained in our earlier petition to the president in order to reduce the unnecessary pressures on our pockets and to also help stabilise the pockets and incomes of Ghanaian workers and the generality.

The SPT must be scrapped and government must no longer hesitate to do what is fair and just for the ultimate good of Ghanaians.

We are also mindful of several other avoidable taxes on the price build up and once again reiterate our call for a further downward review of some of the tax elements contained in the petroleum pricing build up as we believe government equally makes some serious gains or incomes with the surge in world market prices since Ghana is also a crude producing country that enjoys all the positives with any increases on the international market.

From the foregoing, Copec believes a gallon of petrol and diesel at the pump should not be sold beyond 18 cedis instead of the current unbearable rate of above Ghc20/gallon.

The net effect of these rampant pump prices’ increases is a corresponding increase in prices of foodstuff, goods and services, import duties and inflation generally as basic necessities of life shoot up in the face of rather stagnant meagre incomes and salaries of the Ghanaian worker.

Government as a matter of urgency will need to give Ghanaians some relief by reviewing the numerous taxes in the petroleum pricing build up to bring about some stability and reductions to ease the pressures on our pockets.

We encourage the Government to rather introduce new and ingenious ways of expanding the tax bracket to attract more revenue than the over-concentration on petroleum taxation, the government must proactively explore other revenue generating sources for national development as the over-dependence on Petroleum taxation affects every aspect of our lives and that of the economy generally because of its chain effects-Not even the size and price of Kenkey is spared.

Ladies and Gentlemen of the press, the current situation if not urgently addressed by government will certainly leave Ghanaians with having to cough up even more cash to be able to go by their daily activities in the face of harsh conditions of living to pay for further increases in petroleum products in February.

Ghanaians can no longer bear any further increases in petroleum products. Copec is calling on the government to put in a timely relief and to forestall any further increases and to also reduce the overburdening incidents of taxes for all of us in the country.

COOPERATION WITH STAKEHOLDERS 

We further caution against the phenomenon of some assigns at the Ministry of Energy attempting to deny the obvious whenever pump prices go up and people ask relevant questions. It is very insulting to engage and live in self-denial anytime prices of petroleum products are increased at the pumps and rather choose to engage in firefighting approaches.

The unmerited attacks on bodies and other stakeholders in the petroleum downstream sector that give real time updates on petroleum pricing, volumes and other developments window must cease forthwith .

Government must rather work proactively with all these stakeholders as partners and collaborate with them in finding lasting solutions to the precarious petroleum issues such that the interest of the average Ghanaian consumer is jealously protected and safeguarded at all times.

CEDI DEPRECIATION 

Ladies and Gentlemen of the press, another worrying development that is compounding frequent increases in petroleum products is the depreciation of the cedi. Anytime the cedi loses value to the dollar and other international currencies amidst rising and unstable global oil prices, the ex-refinery prices of petroleum products increase.

Fuel which was sold at the pumps for Ghc 3.630/litre or Ghc 16.30/gallon in December 2016 is now being sold for Ghc 4.630/litre or Ghc20.85/gallon representing 27.9 per cent or 28 per cent net increases over the past one year. One can not discount how the depreciation of the Cedi has largely affected these increases.

We implore Government to put the necessary measures in place to arrest the continuous fall of the cedi against other major foreign currencies to stem its corresponding increment in petroleum products.


We in Ghana can no longer bear the unjustifiable increases in petroleum products. Conditions of workers are worsening with these increases. We implore Government to listen to the pressing needs and concerns of Ghanaians.

For the avoidance of doubt the following countries equally buy same products from the international market as Ghana does but their current pump prices leaves one wondering if Ghana is not being rather too harsh by way of tax overloads on fuel prices.

Country px/gallon/cedi

1. Egypt Ghc7.74/gallon
2. Algeria Ghc7.74/gallon
3. Nigeria Ghc10.04/gallon
4. Angola Ghc16.50/gallon
5. Liberia Ghc 16.50/gallon
6. Benin Ghc 17.70/gallon
7. Dubai Ghc 12.01/gallon
8. USA Ghc 15.40/gallon
9. Ghana Ghc 20.83/gallon
10.Russia Ghc 15.27/gallon

Some of the above listed countries produce oil while others don't but are clearly not overcharging their people by way of taxes to push pump prices above pockets as Ghana is currently experiencing, something is indeed wrong somewhere and a solution ought to be found sooner than later.

PREMIX ISSUES

The premix issue is yet to be fully addressed as the same structure that saw the diversions continue to exist today and we will like to see a complete overhauling of that system to curtail any further incidents of diversions and profiteering while eventually dumping these products at our pumps.

BOND ISSUANCE

Another disturbing phenomenon over the past months has to do with the growing dependence on bonds or loans for the energy sector which is only compounding and aggravating the debts on all of us, the last bond issuance is known to have cost the tax payer something in excess of Ghc180million in management fees alone together with a coupon rate of almost 20% which translates to some addition $500million from the $2.5billion being sought for, these developments must be carefully scrutinised as the add-ons will only compound the issues for the poor Ghanaian worker and the generality.

President Akufo-Addo must thoroughly scrutinise these developments and find a lasting solution to the challenges so discussed here as we remind him of his personal promise to better the lives of ordinary Ghanaians.