Debt from crude oil imports hits Gh¢200 m

Page 3 (lead) September 18/2008

Story: Charles Benoni Okine

THE debt incurred from crude oil imports hit the GH¢200 million mark in July this year, with the Tema Oil Refinery (TOR) being the hardest hit.
That followed the freeze on the upward review of petroleum prices to reflect the soaring prices of crude oil on the international market, sources from the NPA and the Ministry of Finance and Economic Planning hinted the Daily Graphic in an exclusive interview.
The NPA stopped reviewing the prices of the products when the price of the commodity hit $118 per barrel.
It skyrocketed to about $147 per barrel, the highest in the history of the oil industry, until recently when the price began to drop to its lowest level in seven months to $92.30 last Tuesday.
The NPA has, therefore, made it clear that it will not undertake any downward adjustment of the prices of petroleum products yet.
It said until a significant portion of the debt incurred from crude oil imports into the country had been recovered, the freeze on the review of the prices would prevail.
Sources say the debt on the crude oil imports brings to memory the amount under-recovered from crude oil imports in 2000, a situation which adversely affected the banking industry, particularly the Ghana Commercial Bank.
It also brought in its wake high inflation, a drop in the value of the cedi against the major foreign currencies, while interest rates also soared and made borrowing unattractive for the industry and small and medium-scale enterprises.
Although the effects of the present debt have not been in the magnitude of those of 2000, inflation has risen, while interest rates have also gone up marginally, according to experts.
The cedi has depreciated against the dollar, for instance, by 14 per cent over the last two months, aggravating the cost of oil imports into the country.
As part of a mitigation package to ease the burden of the soaring prices of crude oil and food on the international market on Ghanaians, the government, on July 4, imposed a freeze on the review of petroleum prices, hence the debt.
The sources maintained that considering the size of the debt and its impact on the economy, it was only prudent for the amount to be recovered to avert any further shocks on the economy.
“Something good was done for consumers when the high prices were absorbed and it is only fair that the prices are maintained for a while to allow those importers in debt to recover,” the sources said.
The high prices of crude oil on the international market sparked a world-wide uproar, with citizens of various countries calling on their governments to do something about the prices.
However, since the prices began to drop below the $100 mark, consumers are calling for a downward review of petroleum prices to reflect the current prices of crude oil on the international market but the government the and NPA will not budge.
According to the sources, the importers were evaluating how much had been gained so far from the recent respite before any decisions on reviews were made.