Cedi performance, international market prices main determinants of ex-pump prices – CBOD CEO
In a press briefing on Thursday, Patrick Ofori, the Chief Executive Officer (CEO) of the Chamber of Oil Distributors (CBOD), challenged the prevailing belief that the gold for oil programme significantly influences ex-pump prices in the country.
Ofori emphasized that while the programme has played a role in curbing exchange rate speculations, the main determinants of fuel prices remain the performance of the cedi against the US dollar and international oil prices. This statement directly contradicts assertions made by government officials who have credited the gold for oil programme for the continuous decline in ex-pump prices.
During the briefing, Ofori shed light on the complex factors that contribute to the pricing of fuel in the country. In addition to the cedi’s exchange rate and international oil prices, other critical elements include suppliers’ premium, taxes, levies, regulatory margins, and the margins imposed by marketers and dealers. These multifaceted factors collectively determine the final price at the pump and highlight the intricacies involved in the fuel pricing mechanism.
While acknowledging the positive impact of the gold for oil programme in stabilizing exchange rate fluctuations, Ofori clarified that it has had no direct effect on the reduction of ex-pump prices. He pointed out that recent declines in fuel prices can primarily be attributed to the fall in international petroleum product prices.
As global market trends suggest a continued downward trajectory in oil prices and a relatively stable cedi, Ofori predicted that ex-pump prices are likely to witness further decreases in the coming months.
The gold for oil programme, which aims to facilitate the importation of fuel using Ghana’s gold reserves, has seen a significant volume of fuel imported into the country. To date, a total of 455,000 metric tonnes of fuel has been imported under the programme. The inaugural fuel consignment, amounting to 40,000 metric tonnes valued at $40 million, arrived in January 2023, marking the commencement of the gold for oil initiative.
Amidst ongoing debates surrounding the impact of the gold for oil programme on ex-pump prices, Ofori’s remarks provide a valuable perspective that challenges the prevailing narrative. By highlighting the core drivers of fuel costs and dispelling misconceptions, the CEO of CBOD offers valuable insights into the complex dynamics of the energy market in Ghana.
As the nation grapples with various economic factors affecting fuel pricing, stakeholders and policymakers would benefit from a comprehensive understanding of the intricate interplay between exchange rates, international oil prices, and other elements in determining ex-pump prices. Ofori’s clarifications provide a basis for informed discussions and policy decisions that can foster greater transparency and efficiency in the fuel industry.
While the gold for oil programme has yielded benefits in stabilizing exchange rates, it is not the sole catalyst for the reduction in ex-pump prices. Instead, factors such as the cedi’s performance against the US dollar and international oil prices continue to be the primary drivers. Ofori’s remarks underscore the importance of considering multiple variables when analyzing fuel pricing, urging stakeholders to approach the topic with a comprehensive perspective that aligns with the complexities of the energy market.
