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Archive for January 11th, 2015

The Idiots of January. Critical News, 11th January 2015

Posted by Business in Ghana on January 11, 2015

Sydney Casely-Hayford, sydney@bizghana.com

By 16th June 2014 we were paying ghp273 for a liter of premium fuel. Today it is costing us ghp305. On that date the cost of crude oil on the international market was $114 a barrel. Oil now costs close to $50 a barrel. Over 56% drop in price.

That change from ghp273 to ghp305 does not represent a 10% drop in the price of petrol at the pump. If you benchmark the cost to a later period, say 1st December, the ex-pump price was ghp339 for a liter. The cost to the consumer went up ghp66 from that period.

After automatic price hikes between June and December from ghp273 to ghp339, our Government would want us to believe that it is doing us a big favor by reducing the ex-refinery price of petrol by 10%.

To arrive at the ex-pump price of petrol, which is where we feel the pinch in our pockets, the law adds taxes, levies and margins to an ex-refinery price and the National Petroleum Authority advises Government of the true cost of delivering petrol to the retailing companies such as Shell, Total, Goil etc.

In this situation, Government then makes an illegal add-on or subtraction to arrive at the ex-pump price. This so-called price stabilization margin is a politically decided figure and has been used by all Governments to court voting favors from the masses.

The idiot’s guide to calculating an economic price of the most important product in our life is simple. There is a law and we must follow the law and allow it to work. Adjusting the cost build up under the guise of mitigating losses chalked up by the very same government that has broken the law should not be acceptable. Read the rest of this entry »

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