Social distancing in public transports: reduce fuel price by 20%
Adnan Adams Mohammed
Alexander K. Mould, a finance and energy expert, is calling
on the government to effect a 20 percent reduction in fuel prices to help
alleviate public transport social distancing losses as the commercial drivers
are directed to reduce the number of passengers the buses take.
In a press statement issued, yesterday, the former National
Petroleum Authority Boss noted that increased transportation cost will worsen
the anticipated effect of the global pandemic (COVID-19) on the general economy
and the cost of living of ordinary citizens such as loss of income and
businesses and increase in the costs of goods and services.
The challenges of the current season provide a
responsibility to quickly visit “win-win” opportunities to alleviate some of
the financial burdens on all Ghanaians as April 1st, 2020 presents a
“no-brainer” opening to reduce the cost of petrol at the pump.
“Petrol is at its lowest price since the 1990s –
$0.38/gallon wholesale from U.S refiners and Wholesalers. With this in mind,
Ghana should expect a drastic drop of up to 20% in petrol prices on April 1st”,
Mr Mould suggested. Adding that, “Petrol is currently imported into Ghana for
less than $0.24/litre or GHS 1.40/litre (based on FX rate of GHS5.85 GHS/USD).”
Read below the full press release:
PRESS STATEMENT
20% reduction in fuel prices will alleviate public transport
social distancing losses - Alex Mould
As the lockdown to combat the spread of the Coronavirus is
now in effect, Ghanaian families and businesses will have to reset. A domino
effect on our economy caused by the pandemic is expected to bring about challenges
such as loss of income and business, and increase in the costs for goods and
services, and other factors impacted by increased transportation costs.
The challenges of the current season provide a responsibility
to quickly visit “win-win” opportunities to alleviate some of the financial
burdens on all Ghanaians – April 1st presents a “no-brainer” opening to reduce
the cost of petrol at the pump.
Petrol is at its lowest price since the 1990s – $0.38/gallon
wholesale from U.S refiners and Wholesalers. With this in mind, Ghana should
expect a drastic drop of up to 20% in petrol prices on April 1st.
Petrol is currently imported into Ghana for less than
$0.24/litre or GHS 1.40/litre (based on FX rate of GHS5.85 GHS/USD).
The daily price indicators used for the Petroleum Price
Build-Up (PBU) as published by the National Petroleum Authority (NPA) are as
follows:
- 1st March: $540/ton (t)
- 16th March: $434/ton (t)
- 1st April: $212/ton (t)
This translates to a drop of 50% from 16th March and a 60%
drop from 1st March.
Going by these Price Build-Up (PBU) indicators and the
methodology used to derive them, we expect petrol prices to go as low as GHS
GHS4.00/litre. This price can go down even further with Government
interventions in the form of tax breaks.
From the PBU, the taxes and distribution costs of petrol are
GHS1.50/litre and GHS1.10/litre respectively (or GHS 2.60 combined); which
represents about 65% of the pump price of petrol.
This makes Ghana one of the highest-taxed countries with
respect to petrol.
I am reliably informed that Government is being advised to
seriously contemplate removing the nuisance “Special Tax” (GHS0.46/litre) and
the outdated “Price Stabilization” levy (GhS0.16/litre). If done, we could see
prices fall even lower than the expected GHS 4.00/litre to below GHS
3.50/litre.
Enacting these very doable reductions would be a relief to
so many – remembering that nearly 80% of our population constitutes key workers
who, in serving the public will have to embark on alternate (and more
expensive) transportation means to keep themselves safe, as per social
distancing guidelines.
Notes
· Note: a US
Gallon is 3.875 litres whereas a UK Imperial Gallon - what is used in Ghana -
is 4.5 litres.
· PBU is
agreed to by all the players in the value chain - (Chamber of Bulk Distributors
(CBOD), Association of Oil Marketing Companies (AOMC), Tanker Owners, and
Tanker Drivers; collectively the sector players).
END
Signed
Alex Mould
30/03/2020
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