Gov’t could use $550m windfall to cushion consumers against price hikes – Alex Mould
A former Ghana National Petroleum Corporation boss, Alex Mould, has disclosed that Ghana could earn an additional $550 million from crude oil sales.
This is aside from the government’s expected $1billion revenue from the sales of Ghana’s crude oil.
He noted that this unexpected windfall could go a long way to help government cushion consumers from the sharp price hikes that have characterized the cost of fuel at the pumps in the past months.
In an interview, he indicated that it will only be prudent if government cease worrying about revenue losses as it plans to reduce levies on petroleum products and instead look at the extra revenue it will make from oil sales, royalties and taxes from oil companies.
“Because our benchmark price was about $61 or something like that and the average price that is projected by all the research companies in the world is showing that our crude oil price is going to be no less than $85 for the full year.
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“For the first quarter we’re going to look at something above $100, the second quarter it will drop to about $90, and for the rest of the year it will be in the $80s. So the average for the year is going to be about $85 to $90.
“So if you look at the windfall, and we should understand that government will be getting windfall, because government has only budgeted for $61 and so my calculation based on that shows us that based on 59 million barrels of crude oil, Ghana gets about 20% of the total crude oil and it is split between royalties and also something we call the CAPI. And CAPI is basically the carried and participatory interest and then we have taxes,” he said.
“We’re looking at an increase in royalties from this $20 increase for about $68million with regards to our equity contribution we are looking at about $250million and with regards to taxes, this is from the windfall that will come, we’ll derive to be partners because of Tullow and ENI we’re looking at about $235 million.
“So in all we’re looking at windfall of almost $550million coming the way of government. And this is something government should look at critically if government wants to use part of that to subsidise the price for the consumer,” he added.
