President John Dramani Mahama has hinted another levy will soon be slapped on petroleum products.
The levy which will be called the mitigation levy will be introduced if crude oil price on the world market continues to fall and when government fully pays debt owed the Bulk oil distribution companies (BDCs).
According to President Mahama, the GHS420million cedi debt owed the BDCs has been reduced to GHS171million following savings made from the decline in the price of crude oil.
Speaking on Kumasi-based radio station Angel FM, President Mahama said a fund must be setup to accumulate the over-recoveries to cushion users of petroleum products should the price of crude begin to rise again.
The price of Brent crude oil has fallen to a new five and a half year low below $50 per barrel, its lowest level since 2009.
According to President John Dramani Mahama “when we are done paying the BDCs, I think we should have a mitigation levy to set aside some funds because the price of crude oil will not go down forever. We must be minded that a time will come when it will go up. When it goes up, we will need some money to mitigate or hedge the price so that we will not take the full hit of a price increase”, he said.
He added that “so I think when parliament reconvenes, they will have to look at where we will put the money. I recommend that we put it in a mitigation fund, so that in the future, when the price goes up, we will use the money to hedge”.
According to the President, “I’m sure the National Petroleum Authority will take the proposal to parliament so they know what to do to it.”
Meanwhile President Mahama adds that the prices of petroleum products at the pumps may be reduced further should prices of crude oil continue to fall.
The NPA reduced the price of petrol in Ghana by 10% citing the plunge in oil price and stability of the Cedi.
A number of stakeholders have criticised the authority, accusing them of short changing Ghanaians under the pretence of paying the BDCs.
President Mahama defending the rate of decline said “If you say they have reduced the price of crude oil on the world market, so we have to price petroleum prices at the same rate, while ignoring the debt, then we will use monies that is meant for national development to pay the BDCs”,
According to him, “You can’t eat your cake and have it. So we have paid some of the debt owed the BDCs, it is now GHS171million and we have reduced price of petrol by 10%. If you will observe it is still declining and so NPA will review and adjust it again.”
The downstream petroleum regulator, the NPA is expected to announce a review the price of petroleum products on the 16th of January, 2015 as part of its bi-monthly review.
By: Kwaku Anim Boadu/citifmonline.com/Ghana