Energy expert Benjamin Nsiah has called for a complete review of Ghana’s petroleum pricing framework. He argues the current system fails to protect consumers and businesses from frequent fuel price fluctuations. This call comes as Ghana faces repeated increases in petrol prices.
Nsiah, from the Centre for Environmental Management and Sustainability Energy (CEMSE), stated the existing pricing model relies heavily on international market prices and the exchange rate. This reliance exposes the Ghanaian economy to significant external shocks. The expert highlighted that global factors, including geopolitical tensions, disrupt supply chains and push up international petroleum prices.
This situation fits into Ghana’s broader economic narrative of battling inflation and currency depreciation. The Ghana cedi’s depreciation against major international currencies directly impacts the cost of imported petroleum. This makes fuel more expensive at the pump. The Bank of Ghana has consistently worked to stabilize the cedi and manage inflation, but external pressures remain a challenge.
Speaking on the Asaase Breakfast Show on Tuesday, July 28, Nsiah emphasized the need for a more flexible fiscal and pricing regime. He said this new framework should absorb global market volatility while maintaining stability at the pumps. “The whole pricing of petroleum products, we need a new framework,” Nsiah stated. He added that the current short-term data, where prices change every window, affects planning for businesses and individuals.
The continued increase in fuel prices has significant implications for Ghana’s economy. It could lead to higher inflation, increased transport costs, and elevated interest rates. Nsiah explained that fuel price hikes affect several components of the Consumer Price Index (CPI), including transportation, food, and utilities. When inflation rises, the Bank of Ghana often implements monetary policy measures, such as increasing interest rates, which can contract economic activity.
Nsiah also urged a review of Ghana’s fuel tax and levy structure. He argued that frequent amendments to petroleum-related laws create uncertainty for stakeholders. Instead of repeated adjustments, policymakers should develop a long-term framework. This framework would cushion consumers during periods of global price shocks. Such a stable policy environment would allow businesses to plan more effectively and reduce the burden on ordinary Ghanaians.
The expert’s recommendations highlight the urgent need for policy adjustments to safeguard Ghana’s economic stability. Decision-makers will need to consider how to balance market forces with consumer protection. The long-term impact on inflation and economic growth will depend on the government’s response to these calls for reform. Markets will closely watch any proposed changes to the petroleum pricing regime.