The Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors, Senyo Hosi, says the depreciating cedi is largely to blame for the rising cost of petroleum products which is by extension affecting prices of other things such as transportation and food prices.
The Chamber of Petroleum Consumers has predicted that prices of petroleum products will from tomorrow, Wednesday, March 16, 2022, witness a surge with consumers expected to pay GHS10 per litre.
While reacting to the prediction, the Bulk Oil Distributors also blamed the situation on the volatility of the market as well as the rising cost of crude on the international market.
Speaking on the Citi Breakfast Show with Bernard Avle, Senyo Hosi, said “the cedi depreciation has been quite burdensome on the petroleum importers. For instance, at the beginning of this window that started from 1st of March, it was estimated that in the next two months the exchange rate will be about GHS 7.8 because when we sell, we do so on credit.”
”It takes us about 45 days to collect cash, and then we spend another 15 days to convert and pay your suppliers in dollars, and we assumed GHS 7.8 will be the price. Today, we are practically at GHS8. Now, because we don’t have an active forward market, a dedicated foreign market for the oil industry, the speculation gets out of gear and getting to the next one, we need to speculate higher.”
Speaking on the same program, the Chief Executive Officer of the Association of Oil Marketing Companies, Kwaku Agyeman Duah, said it was high time the government introduced subsidies to mitigate the impact on the market.
“Obviously, when we get to this stage what the state can do is to subsidize. We need a well-targeted subsidy. Because we don’t have a working public transportation system, it affects us. If there was something like that, the government could have managed it. Now, all we can do is to subsidize.”
The Ghana cedi has recently been under serious stress depreciating against major trading currencies including the US dollar.
Between January and March 2022, the currency has lost more than 14% of its value, a very significant drop compared to previous changes.
The development is leading to the rising cost of products in the country including cement and fuel.
The government is yet to make any direct pronouncement on what actions it is taking to tackle the problem, although various stakeholders have been making some suggestions.