If the country could maintain a strong and relatively stable local currency, the reduction in fuel prices could be sustained for a long time for the benefit of Ghanaians, the Institute for Energy Security (IES) has argued.
This comes on the heels of the fall in fuel prices in the second pricing window of November. A reduction in fuel prices on the international market has already led to some Oil Marketing Companies (OMCs) reducing their prices at the pumps.
The state-owned Goil took the lead by reducing its price at the pumps. The company has now lowered the petrol price from GHȼ14.64 per litre to GHȼ 14.35 per litre.
However, diesel prices remain unchanged and sell at GHȼ 15.45 per litre. LPG has also seen a marginal decline in price. The reduction is beginning to reflect at the various pumps.
Speaking in an interview with The High Street Journal on the sustainability of this reduction, the Research and Policy Analyst at IES, Xatse Derick Emmanuel, emphasized that the country can only maintain stable and lower fuel prices if the depreciation of the cedi is checked.
He explained that two main factors account for the oil price fluctuations at the pumps. The first factor which is the price of crude on the international market, he observed, cannot be controlled by the control. The prices are determined by the forces of demand and supply and geopolitics, he added.
“We do not have any control over it. What happens on the international market is purely the forces of demand and supply of oil and the geopolitical tensions that arise from that angle. We those in Ghana do not have control over it, we are just price takers,” Derick Xatse explained.
However, the second factor which is the exchange rate, the energy policy analyst said is what the country can control to ensure sustainable fuel prices for Ghanaians.
He posited that even if prices on the international markets fall and the cedi depreciates, the depreciation will offset the reduction which will erode the gains Ghanaians could get.
“Going forward if only we can assure ourselves that the currency will be able to appreciate or the rate of depreciation will be more reduced then we should expect that prices at the various pumps will be more favourable to the consumers,” he further indicated.
He added “But even if, like with the current development that we are experiencing, where prices on the international market are falling but for currency depreciation we are not able to have a full effect of it, then basically we cannot project much going forward.
“If the currency appreciates, things will be more favourable, if the currency depreciates more then things will not be favourable to consumers.”
