Govt Creates Forex Market For Petroleum Importers To Contain Fuel Hikes
Mr Andrew Egyapa Mercer, the Deputy Minister of Energy, says the government will create a special forex market to enable petroleum importers to have access to dollars for their trade.
This formed part of measures being taken to contain the depreciation of the local currency (the Cedi) against its major trading currency, the dollar, which had contributed to the hike in fuel prices and its attendant inflationary pressures.
Mr Mercer said: “A key consideration that has been tabled for which a meeting has been scheduled for Monday (March 21) with the Ministry of Finance is to see how the Bank of Ghana (BoG) can intervene by creating some forex market that then allows some forex availability for the importers of petroleum products.”
He added that: “That’s been worked on, and the expectation is that we’ll get some conclusion in the coming week to enable them (petroleum importers) to do the needful at the next pricing window.”
The Minister explained that it had become important for such a forex market to be created to cushion the importers in the face of the current exchange rate challenges.
He was contributing to a discussion on ways to mitigate the impact of fuel hikes on Ghanaians.
He said: “A component in the price build-up is the exchange rate, but we’ve seen the cedi is depreciating at a faster rate owing mainly to the downgrade by the rating agencies and some speculations by some people, who are scrambling for the dollar.”
He added that with the availability of the dollar for the importers even for about two months at a certain rate, then the importers would be able to plan and there would be a minimal impact of any depreciation that occurred within that period.
Mr Mercer noted, “If that is done, in addition to other measures that the BoG is taking to bring some sanity into within the space and some control on the cedi, we’ll see some stability, that then based on the world market price, can impact the prices at the pump.”
He said the government was sensitive about the hikes in the prices of fuel at the pumps, hence the Commission of the work of the National Petroleum Authority (NPA), which resulted in the proposal to scrap some taxes.
The taxes were the special petroleum tax, energy sector recovery levy, and the sanitation and pollution levy, which the Minister observed that scrapping them would lead to a 67 pesewas reduction, therefore, more needed to be done.
Edward Bawa, a Member of Parliament’s Mines and Energy Committee, attributed the increase in fuel prices to the poor performance of the Cedi against the dollar and urged the government to take urgent steps to address it.
Alhaji Ibrahim Moro, the spokesperson for GPRTU, lamented about the impact of the fuel hikes on their business, and said they had made proposals for a 15 per cent increment in transport fares, pending a meeting with the government soon.
Meanwhile, the Institute of Economic Affairs (IEA), a policy think-tank, has asked the government to strictly enforce the foreign exchange laws relating to the documentation requirement for external transfers and limits on carry-on foreign currency by travellers.
In its proposal to the government, the institute also recommended that the documentation requirements for foreign currency purchases from the forex bureau and activities of unlicensed foreign currency dealers be looked at.
The ex-pump price of petrol and diesel has shot up with some Oil Marketing Companies (OMCs) adjusting their rates upwards to GH¢9.7 per litre for petrol and GH¢10.30 for diesel.