The rising prices of petroleum products in the country have reduced disposable income significantly by increasing household budgets for not just fuels, but also transportation charges, vital commodities, and other goods and services.
Persons worst hit are the unemployed, underemployed and workers whose salaries and wages have not been increased at all.
The ex-pump price of a litre of petrol which was GH₵6.75 in January has jumped by 94% within the first 10 months of the year and is currently selling for GH₵13.10.
In the same vein, a litre of diesel which sold for GH₵6.7667 in January recorded 136% price change between January and October, 2022 and is now selling GH₵15.99 per litre.
These prices will run till the end of October and new prices will take effect from November 1, 2022 for the first pricing window.
Price increase trend
Out of the 20 pricing windows in the 10 months, petrol recorded 14 increases, four price reductions and one window did not experience price change.
Similarly, diesel also recorded 14 price increases, four price reductions and one window did not experience price change.
Cedi depreciation
A significant fall in the value of the cedi against the US dollar and the sharp rise in petrol and diesel prices on the global market caused the rise in the fuel prices.
The value of the cedi has depreciated by almost 40% since the beginning of the year.
The figures used reflect that of Oil Marketing Companies (OMC) with the highest-priced fuel on the downstream petroleum market namely GOIL, Total and Vivo (Shell).
FoB Price
Ghana imports refined products, and the Free on Board (FoB) price of a metric tonne of petrol imports increased by 36% from $707.95 in January to $964.75 in October 2022.
In the same vein, the FoB price of diesel jumped by 71% within the first 10 months from $641.38 in January to $1,097.18 in October.
Formula for determining ex-pump prices
The price of fuel in Ghana is determined by a formula that takes into consideration the following factors such as the world market price of each petroleum product; the cost of importing or producing the product and making it available for loading to retail outlets at the storage depot (referred to as the Suppliers’ Premium); the Ghana Cedi (GHS) to US Dollar (USD) exchange rate; the taxes/levies on each petroleum product; and the distribution margins on each product.
In Ghana, there are two pricing windows in a month (1st – 15th and 16th to end of the month) within which both the Bulk Import Distribution and Export Companies (BIDECs) and Oil Marketing Companies (OMCs)/Liquefied Petroleum Gas Marketing Companies (LPGMCs) generally review the prices of petroleum products.
However, because of the bi-weekly pricing window policy practiced in Ghana, the daily prices on the world market are averaged for a two-week period and used in the pricing formula.
The world market prices and the exchange rates used in the pricing formula to determine ex-pump prices in Ghana vary for every pricing window due to the daily changes mentioned above.
