Alex Mould is the Chief Executive of the National Petroleum Authority (NPA).
Posted on: www.dailyguideghana.com
By William Yaw Owusu
Wednesday December 14, 2011.
Fear and panic has set in the ranks of government officials in charge of petroleum following an order by an Accra High Court, compelling the National Petroleum Authority (NPA) to reduce fuel prices.
A source close to Daily Guide says the Ministry of Energy and the NPA are having torrid time deciding on what to do after the court ordered them to remove illegal margins disguised as “ex-refinery differential”.
The court presided over by Justice Patrick Baayeh on November 28 gave the order after Kwaku Kwarteng the New Patriotic Party (NPP) parliamentary candidate for Obuasi, Abdul Ganiyu of Tamale and Development Data, a date analysis group had filed a writ in September 2009 praying the court to abolish an illegal margin smuggled into the price build-up of petroleum prices by the NPA.
According to the court, the illegal margins imposed on June 5, 2009 were as follows: Fuel Illegal Price Additions: Diesel 95 GHp per gallon; Petrol 29 GHp per gallon; Kerosene 42 GHp per gallon; LPG gas 08 GHp per kilogram; and MGO local 69 GHp per gallon.
The High Court further ordered the NPA to publish the total amount accrued from the imposition of the illegal margins in the Daily Graphic and Ghanaian Times within four months from the date of the judgement and pay the amount into the Consolidated Fund.
To add insult to injury, sources say instead of operating an account at the Bank of Ghana (BoG) for ex-refinery differentials as required by law, the government rather operated the account at Ecobank in clear contravention of the law.
Development Data estimates showed that the amount accrued from the ex-refinery differential from 5th June 2009 and to November 28, 2011, the day of the order had come to GH¢690 million.
Although the government indicated its intention to file for stay of execution pending appeal of the order, they have failed to do so but are still charging the illegal fee which is clearly in contempt of court.
Per the ruling, the NPA was required to announce new fuel prices minus these margins but they have ignored the court’s order.
A source said the government contemplates increasing fuel prices if it is unable to overturn the ruling.
However, some political and economic observers are of the view that if the government has any explanation to give it needed to go to court to demonstrate why it is reluctant to reduce the fuel prices and not play in the ‘media gallery’.
In an attempt to justify the illegal fees, the Ministry of Energy through one of its deputy ministers, Emmanuel Armah Kofi Buah issued a release saying “government agrees with the NPA that the ex-refinery differential is not a tax – that is, the differential does not accrue to government; it is a stabilizing mechanism put in place by the NPA Board in 2006 to ensure the stability of petroleum product prices.”
The release titled: - Government reacts to court ruling on the national petroleum authority (NPA) pricing formula – said “all funds that have been collected into the ex-refinery differential margin account have been used by the NPA in stabilizing prices over the period.”
“This arrangement notwithstanding, government subsidized petroleum products to the tune of about GH¢459 million in 2011, which subsidy is projected to be almost GH¢600 million in 2012 if the situation remains unchanged.”
According to the deputy Minister the court ruling, if allowed to stand, means the removal of the stabilizing effect that the ex-refinery margin account sought to achieve.
“If the court ruling were implemented, the prices of various petroleum products would have gone up by the following percentages: Premium (3.89%), Kerosene (77.57%), Gas Oil (13.36%), LPG (57.26%) and Premix (114.46%)”.
“By every account the government will be irresponsible and insensitive to allow such drastic and dramatic skyrocketing of prices of petroleum products- a situation which will heap untold hardship on the people and end up worsening the economic conditions of Ghanaians.”
“One of the big mistakes the government is determined not to repeat is to allow the accumulation of unpaid petroleum subsidies, which in 2008 largely caused The Tema Oil Refinery’s (TOR’s) debt to reach an astronomical GH¢1.5 billion (15 trillion cedis) - a debt that largely brought the operations of TOR to a halt for about two years and nearly crippled the Ghana Commercial Bank.”
Mr. Buah said over the last three years, the government has had to raise over 1 billion cedis to restore the financial health of both TOR and GCB saying “the painful lesson learned through this recent history is that no matter how long we postpone the inevitable, a time comes when we have no option but to confront the harsh reality and deal with it, and most often at a much greater cost.”
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