Ghana: Fuel Prices To Remain Stable But Cedi Depreciation Biting – IES

The Institute for Energy Security (IES), an energy think tank in the Republic of Ghana, has predicted that prices of fuel across the pumps in the second pricing window will remain stable.

Even though the depreciation of the cedi against other major international currencies especially the US dollar, has gone beyond 10 per cent since the beginning of the year, IES said in a statement on Monday that it “foresees prices of fuel on the local market remaining largely stable”.

The release signed by IES Research and Policy Analyst, Raymond Nuworkpor, however, added that “the continuous depreciation of the Ghana cedi to the US dollar in the last few days may have an adverse effect on the selling price of fuel within the second Pricing-window of December 2019”.

The prediction of stable prices is contrary to the forecast of another energy think tank, the Chamber of Petroleum Consumers-Ghana (COPEC-Ghana). COPEC-Ghana stated last week.

“Fuel prices across most of the major Oil Marketing Companies (OMCs) have seen an increase by almost one per cent since 7 pm on Friday, December 6, 2019” and “the depreciation of the cedi if left unchecked will certainly see prices going up again and even higher in the second window of this month”.

Below is the full statement from IES:

16 TH DECEMBER, 2019

CEDI DEPRECIATION EXERTING PRESSURE ON LOCAL FUEL PRICES
REVIEW OF DECEMBER 2019 FIRST PRICING-WINDOW

 Local Fuel Market Performance

Prices of petroleum products experienced an increment in the Pricing-window under review. Fuel prices within the first Pricing-window of December 2019 saw the Oil Marketing Companies (OMCs) adjusting prices of Gasoline and Gasoil upwards to GH¢5.41.

This represents an average of 0.93 increment. The current national average price of fuel per litre at the pump is pegged at GH¢5.36 for both Gasoline and Gasoil. For the Pricing-window under review, Zen Petroleum, Benab Oil, Pacific, SO Energy and Alinco Oil sold the least-priced Gasoline and Gasoil on the local market according to IES Market-Scan.

World Oil Market

Crude oil prices continue to remain above the $60-dollar margin for two consecutive windows as OPEC reached consensus with its partners including Russia on Friday, December 6, 2019 to strengthen output cuts in an effort to trim the global supply and stabilize prices. According to reports, the cuts will increase the existing agreement by an extra 500,000 barrels per day (bpd) reduction in the first quarter next year. OPEC’s current consensus is a supply cut of 1.2 million bpd and the increased amount represents about 1.7 per cent of global oil output. On Average, Brent crude rose marginally from $62.54 per barrel to close at $62.87 per barrel; thus recording a change of 0.52 per cent. According to Standard and Poor’s Global Platts benchmark for fuels, Average Gasoline Price decreased by 1.51 per cent to close at $590.32 per metric tonne, from a previous average of $599.36 per metric tonne; while Gasoil increased marginally by 0.23 per cent to close trading at $580.70 per metric tonne from a previous $579.36 per metric tonne.

Local Forex

IES data collected and analyzed indicate a 2.10 per cent depreciation of the local currency (GH¢) against the U.S Dollar ($) over the past two weeks. The dollar currently trades at GH¢5.71 as against GH¢5.59 in the previous window.

PROJECTIONS FOR DECEMBER 2019 SECOND PRICING-WINDOW

Taking into consideration the relative stable prices of Crude oil and Gasoil on the international market, as well as the over 1.51 per cent decrease in the price of Gasoline; the Institute for Energy Security (IES) foresees prices of fuel on the local market remaining largely stable. However, the continuous depreciation of the Ghana Cedi to the US Dollar in the last few days may have an adverse effect on the selling price of fuel within the second Pricing-window of December 2019.

Signed:
Raymond Nuworkpor

Research & Policy Analyst