Reduce use of petroleum products — Baah Wiredu

Back (lead) April 25/2008

Story: Charles Benoni Okine

GHANAIANS have been called upon to make some sacrifices by drastically cutting down on the use of petroleum products to reduce the government’s import bill on crude oil.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, who made the call, noted that rising crude oil prices on the international market were fast draining the government’s foreign reserves and gradually eroding the macro-economic gains chalked up over the years.
Speaking to the Daily Graphic in Accra on Wednesday, the Finance Minister said the high cost of crude oil had forced the government to resort to borrowing, both locally and internationally, to be able to continue to purchase oil.
“We are aware of the consequences of this borrowing option on the economy but we cannot also sit back and allow shortages in the system because there is no money,” he explained.
Ghana uses 60,000 barrels of crude oil a day and any reduction in crude oil imports will have grave consequences on the economy, as many activities will either slow down or grind to a halt.
Crude oil sold at $25 a barrel as of the end of 2001, as against the present price of about $118 a barrel on the US Mercantile market.
Although the minister did not confirm it, reports reaching the Daily Graphic indicate that the country’s foreign reserves, which used to stand at almost four months of import cover, have reduced drastically to about two months and are falling by the day because of the current crude oil price situation.
He said the Volta River Authority (VRA), which imports crude oil to run the thermal plant at Aboadze, was also badly feeling the pinch and wondered how many Ghanaians were ready to pay a little more for electricity to enable the authority to at least break even.
Mr Baah-Wiredu justified the rationale for the deregulation of the petroleum downstream sub-sector which, he said, was necessary “because now, to a large extent, we are paying near realistic prices for petroleum products”.
His explanation of the consequences of skyrocketing crude oil prices on the international market was clear enough to indicate that the government was not prepared to reduce the taxes on petroleum products to ease the burden of the high prices on consumers.
“Reducing the taxes means we have to reduce our expenditure, and I wonder which area we should reduce or cut to sacrifice for the reduction in the taxes on the petroleum products,” he said.
Mr Baah-Wiredu said the government was in a difficult situation as of now and was working around the clock, taking into consideration many options, all geared towards ensuring that the economic gains of the past were not eroded to take the country back to the period of extreme hardships.