Fuel price hikes hurt business - AGI
The Association of Ghana Industries (AGI) has called on the government to revert to the use of the automatic adjustment system in the pricing of petroleum products.
According to the AGI, not only were the current fuel price hikes hurting businesses but also the timing was totally wrong and the process too sudden.
“The AGI is of the view that fuel price reviews must be made amenable to the automatic adjustment system that allows periodic price reviews for effective planning,” a statement signed by the AGI President, Nana Owusu Afari, and issued in Accra said.
The association said in the first half of 2012 alone, the cedi depreciated by about 20 per cent, while crude oil prices on the world market averaged an increase of about eight per cent, adding that those factors should have automatically occasioned fuel price reviews.
The private sector umbrella body, however, said it appreciated the possible risks that came with implementing the automatic adjustment formula when unexpected changes such as the exchange rate and world crude oil prices occurred, but called on the government to devise means to mitigate the risks.
“We urge the government to develop a system to manage such challenges. In this regard, the AGI recommends the effective implementation of risk management strategies such as hedging to deal with such situations,” it said.
The AGI also wanted the government to make adequate provisions in the budget for fuel subsidies for effective planning and submit a supplementary budgets to cover any unplanned additional subsidies on account of significant changes in the price determinants.
It added that when the budgetary allocations proved inadequate, parliamentary approval should be sought to go beyond the threshold.
The Tema Oil Refinery (TOR) has had its operations scaled down significantly due to inadequate government financing. But the AGI wanted the company resourced as soon as possible to ensure continuous supply of finished products, including residual fuel oil to industry and units that needed them.
“We should also be adding value to our crude oil to generate industrial growth and save foreign exchange,” it stated.
The AGI is a non-profit organisation recognised as the leading voice of the private sector in Ghana.
