Ghana: Fuel Prices To Lose Stability In May-IES

The Institute for Energy Security (IES), an energy think tank in the Republic of Ghana, is predicting that fuel prices on the local market will lose stability in the first pricing window.

The prices of gasoil and gasoline at the pump currently is around GHS4.20 per litre.

However, IES believes that the sharp fall in crude oil prices on the international market and the depreciation of the cedi will cause fuel prices to lose stability.

“Going by the 13.05% reduction in price of Crude oil, combined with the 20.96% and 18.45% considerable fall in the prices of Gasoil and Gasoline respectively on the international market; the Institute for Energy Security (IES) foresees prices of fuel on the local market losing stability in the first Pricing-window of May, 2020.

“The expected fall in prices of fuels at the pump, takes into account the local currency’s marginal depreciation against the U.S. Dollar,” IES said in a statement copied to energynewsafrica.com.

 LOCAL FUEL PRICES TO LOSE STABILITY, TO TILT DOWN

REVIEW OF APRIL 2020 SECOND PRICING-WINDOW

Local Fuel Market Performance

Prices at the pump maintained some level of stability as only few but major Oil Marketing Companies (OMCs) including Goil, Total Ghana, Puma and Petrosol shaved-off few Pesewas during the Pricing-window under review as projected by the Institute for Energy Security (IES). Goil, Petrosol, Puma and Total Ghana trimmed their prices to sell at an average price of Gh¢4.18 for Gasoil and Gasoline. However, the period saw most OMCs maintaining their prices at the pump to produce a national average price of Gh¢4.12 for Gasoline and Gh¢4.14 Gasoil.

Within the period under review, Santol, Benab Oil, Nick Petroleum, Frimps, Champion and Cash Oil, joined Zen Petroleum as OMCs that sold the least-priced Gasoline and Gasoil on the local market relative to others in the industry as found by IES Market-scan

World Oil Market

Brent crude price remain largely around the $25 per barrel mark for the Pricing-window under assessment. Prices plummeted below $20 on April 21^st, as the market reacted negatively towards an evaporating storage capacity as a result of cratering demand and unmanageable supply glut. Following this, Brent crude declined by 13.05% from $29.88 per barrel recorded at the end of the first Pricing-window of April to close at $25.98 per barrel on average terms at end of the second window.

S&P’s Platts benchmark for fuels shows average Gasoline price tumbled by 18.45% to close at $140.25 per metric tonne, from a previous average of $171.97 per metric tonne; while Gasoil declined by 20.96% to close trading at $185.75 per metric tonne, from a previous average of $235.00 per metric tonne.

Local Forex

Data collated by IES Economic Desk from the Foreign Exchange market shows the Cedi depreciated by 1.07% against the U.S. Dollar, trading at an average price of Gh¢5.69 to the U.S. Dollar over the period; a clear departure from the Gh¢5.63 recorded in the first Pricing-window of April, 2020.

PROJECTIONS FOR MAY 2020 FIRST PRICING-WINDOW

Going by the 13.05% reduction in price of Crude oil, combined with the 20.96% and 18.45% considerable fall in the prices of Gasoil and Gasoline respectively on the international market; the Institute for Energy Security (IES) foresees prices of fuel on the local market losing stability in the first Pricing-window of May, 2020. The expected fall in prices of fuels at the pump, takes into account the local currency’s marginal depreciation against the U.S. Dollar.

Signed:

Raymond Nuworkpor

Research & Policy Analyst

(0543887669)