High fuel prices not what NPP promised Ghanaians - TUC

The Trades Union Congress (TUC) wants government to provide leadership and solutions to fix the rising fuel prices and the falling value of the Ghana cedi as it had promised Ghanaians before assuming power.

It also wants the government and its appointees to cut the sermon on how they are better managing fuel prices than would have happened under the erstwhile John Mahama administration because that is no longer the reality.

The TUC in a statement it issued on Monday said workers can no longer bear any further increases and that government needs to do all it can to curb further increases.

The TUC said the reality is that the Mahama-led Administration is no longer in power but the Akufo-led Administration, and despite the interventions by government, fuel prices are rising and Ghanaians are unhappy about it.

“In its manifesto for election 2016, the NPP had promised Ghanaians a reduction in fuel prices. This was to be achieved through abolishing of some of the taxes in the petroleum price build up and a competent management of the economy such that exchange rate losses will not translate into higher fuel prices.

“After more than 18 months in government, fuel prices have gone up by an average of more than 25 percent. Between January 2017 and now fuel prices have been adjusted upwards on 16 different occasions. This was not what Ghanaians were promised. In this same period the minimum wage has gone by 20 percent. The Base Pay on the Single Spine Salary Structure, from which most public sector workers are paid, has also increased by about 24 percent. Given that fuel increases tend to have very noisy rippling effect on general price levels, the frequent upward adjustments as experienced in the last few months has considerably eroded incomes and worsened the plight of Ghanaian workers and their families.”

The TUC urged government to scrap some of the taxes and fees on fuel prices to cushion Ghanaians, as well as look into the various margins and their impact on fuel pricing, saying fuel prices have reached an unsustainable peak for Ghanaian workers and their families.

Below is the full statement by the TUC.

TRADES UNION CONGRESS (TUC)-GHANA STATEMENT ON FUEL PRICES

The Trades Union Congress (TUC) has followed with keen interest developments in fuel pricing over the last one year and eighteen months since the NPP assumed the reigns of government.

In its manifesto for election 2016, the NPP had promised Ghanaians a reduction in fuel prices. This was to be achieved through abolishing of some of the taxes in the petroleum price build up and a competent management of the economy such that exchange rate losses will not translate into higher fuel prices.

After more than 18 months in government, fuel prices have gone up by an average of more than 25 percent. Between January 2017 and now fuel prices have been adjusted upwards on 16 different occasions. This was not what Ghanaians were promised. In this same period the minimum wage has gone by 20 percent. The Base Pay on the Single Spine Salary Structure, from which most public sector workers are paid, has also increased by about 24 percent. Given that fuel increases tend to have very noisy rippling effect on general price levels, the frequent upward adjustments as experienced in the last few months has considerably eroded incomes and worsened the plight of Ghanaian workers and their families.

Despite the promise to abolish taxes, the Price Build-Up remains saturated with taxes and fees. The current fuel price being paid by Ghanaians contain some ten different taxes, levies and margins. Together these taxes, levies and margins constitute more than one- third of the current fuel price. The Special Petroleum Tax alone makes up 30 percent of all the taxes, levies and margins on fuel.

In addition to the taxes, the rising fuel prices have been occasioned by the continuous depreciation of the Ghana Cedis against the US Dollar. 
In January 2017, the Cedi exchange rate was GHC4.20 to the Dollar. Today, the exchange rate is nearly GHC5.00 to the Dollar. The exchange rate losses have been translated one-for-one to the rising fuel prices. Given the dominance of the exchange rate in the determination of fuel prices, further loses will only go to increase fuel price for Ghanaians.

Again this was not what Ghanaians were promised. The NPP had promised to stabilise the exchange rate of the cedi, something, which could have helped stabilise fuel prices. Most surprisingly the NPP government has chosen to fully pass the exchange losses onto Ghanaians in the form of higher and rising fuel prices.

The TUC has noted the statement attributed to the Energy Minister, Hon. Peter Amewu to the effect that but for government interventions Ghanaians would be paying higher for fuel than they are currently paying. According to the Minister, if the Mahama-led administration were to be in power Ghanaians would be paying higher prices for fuel than is currently the case.

It is important for government and its functionaries to understand that in dealing with matters as important as fuel prices, we eschew conjectures. The reality is that the Mahama-led Administration is no longer in power. Akufo-led Administration is in power. And despite the interventions the Minister talked about, fuel prices are rising and Ghanaians are unhappy about it. We require leadership and solutions on how to bring down the prices and not sermon on what would have happened if Mahama-led Administration were to be in office.

In the opinion of the TUG, the rising fuel prices have huge adverse implications for costs of living. The situation has to be addressed. Government must absorb some of the exchange rate losses instead of passing everything to poor workers and their families. In other words, government must consider subsidizing in the interim as it works to stabilise the exchange rate in the medium to long-term.

Secondly, government must reconsider the deregulation policy. The practice where fuel prices are reviewed upward every two weeks has insidious effects not only on prices of other goods and services but also on the psyche of the people. This practice has to be reviewed.

Also, the deregulation process does not appear transparent to us. The guidelines for deregulation require urgent review in the interest of transparency and fairness particularly to consumers.

The TUC urges government to scrap some of the taxes and fees on fuel prices to cushion Ghanaians. Also government must look into the various margins and their impact on fuel pricing. At current levels, fuel prices have reached an unsustainable peak for Ghanaian workers and their families. As workers we can no longer afford any further increases. Government must do everything it can to halt further increases.