Cedi Depreciation Pushes Fuel Prices Up Despite Global Price Drop – CEMSE

The Centre for Environmental Management and Sustainable Energy (CEMSE) has said that despite a decrease in global petroleum prices, fuel prices in Ghana are expected to surge beginning June 1, 2024, due to the depreciation of the Ghana Cedi against the US dollar.

A statement signed by the Executive Director of CEMSE Benjamin Nsiah, explained that the Ghana Cedi depreciated by 7.4% between the last two windows, leading to an expected increase in fuel prices. Diesel prices are expected to rise by 3%, ranging from GHS14.38 to GHS15.14 per liter, while petrol prices are also expected to surge by 3%, with nominal prices between GHS14.10 and GHS15.20 per liter.

“A critical consideration of the petroleum price indicators and the projected forward rate by the BIDECs, Tax, Levies and Distribution margins (TLD) as well as the premiums and conversion factors of these three main products (diesel, petrol and LPG) for 1st June, 2024 (1st Window, 2024), it is estimated that Diesel price is expected to increase by 3% ranging from Ghc14.38 per litre to Ghc15.14 per litre depending on the ability of Oil Marketing Companies (OMC) to transfer efficiency to the petroleum user.”

“The ex-pump price of Petrol is expected to also surge by 3%, with nominal prices between Ghc14.10 per litre and Ghc15.20 per litre depending on the OMC.”

CEMSE also noted that LPG prices are expected to be stable or increase by 1%, selling between GHS15 and GHS16 per kilogram. The price increase is attributed to the depreciation of the Ghana Cedi, rather than a increase in global petroleum prices.

“Further, LPG prices are expected to be stable or increase by 1% selling between Ghc15 per kg and Ghc16 per kg in the next window.”

CEMSE has however recommended that the Bank of Ghana increases its forex allocation to oil importing companies and instructs them to use average prices of auctioned dollars and market rates to set fuel prices. It added that the National Petroleum Authority should consider deregulating the Unified Petroleum Price Fund (UPPF) and allow the market to set its own transport price.

“It is observed that LPG price is higher compared to either petrol or diesel, and this is because of the introduction of $80/MT introduced by NPA on the product since April, 2024. The regulator must halt the collection of this fee so as to decrease the price by about Ghc1.80 per kg” the statement concluded.