-To increase fuel and utility prices

By A A Yayra

Despite its stubborn resistance to review the price of petroleum products yesterday, The Al-Hajj can confidently report today that, the young government of President John Dramani Mahama would have no other choice than to increase the price of fuel and other utilities any time soon to stop the hemorrhage in the economy as a result of continued fuel subsidy and growing public sector wage bill.

This development is mounting intense pressure on President John Dramani Mahama, who at a recent meeting with officials from the Volta River Authority, Electricity Company of Ghana, Bulk Oil Storage and Transportation Company Limited and members of the petroleum distribution companies is reported to have stated that the “increase is not an easy decision for us to take, especially, it’s spiral effect and considering the hardship it would impose on Ghanaians.” The National Petroleum Authority based on approved formula was expected to have announced between 5 to 10% increment on prices of petroleum products yesterday, however, government says it is absorbing the due price differentials amounting to about four million dollars.

Government has over the last 13 months doll out nearly one billion dollars subsidizing petroleum products and the utility services, which development, industry experts and development partners say is unacceptable and has therefore become a burden on the Mahama administration.

The government, our intelligence revealed is therefore seriously considering removing the subsidy so that consumers pay for the full cost of the products. The announcement is expected to be made very soon.

The Al-Hajj gathered that the removal of subsidy which will necessitate the increment in utility and fuel prices is due to pressures from the International Monetary Fund and the World Bank to avert putting Ghana’s economy in dire stress.

The opposition New Patriotic Party, in an avid anticipation that the Supreme Court will yield to their ply by declaring Nana Addo Dankwa Akufo-Addo as President are also adding up to the pressure.

New Patriotic Party’s spin doctor and Executive Director of Danquah Institute, Mr. Gabby Asare Otchere-Darko has been questioning government’s decision to continuously subsidize petroleum prices. “So for how long will gov’t {government} continue to subsidize fuel at this monthly cost of GH¢120m? Can we all accept as a nation that it is unsustainable and the money can be better spent elsewhere?” he wrote on his facebook wall earlier this month.

Another opposition figure, the former Minister for Energy under ex-president Kufuor and Member of Parliament for Afigya Sekyere West in the Ashanti Region, Kan Dapaah has also been advocating for the immediate removal of subsidies on fuel to save the financial burden being imposes on the country.

The World Bank and the IMF in their last review of Ghana’s economy late last year admonished the government to take immediate steps to halt the “bleeding” in the economy and to drastically reduce the budget deficit.

Al-Hajj’s investigations further reveal that apart from government having a lot of salary arrears due for payment this year arising out of the successful introduction and migration of workers onto the Single Spine Salary Structure (SSSS), emoluments for article 71 office holders this year is also expected to impose huge financial burden on the government’s kitty.

Sources at the seat of government, the Osu Castle disclosed to this paper that due to the sharp increment in the their emoluments, government would have to cough out nearly 250 million dollars this year alone to cater for all article 71 office holders.

Also, as a result of the introduction of the SSSS in 2011, government wage bill has moved from two billion to about six billion Ghana cedis in 2012 and it is expected to jump to a whopping eight billion Ghana cedis this year. This development, connoisseurs in the financial sector says has the potential of affecting the performance of the cedi, and also crippling and derailing all the economic gains made so far.

The NDC government has managed to hold down inflation to a single digit for close to 31 months whiles the cedi has been performing well against all the major trading currencies on the world market. However, according to an economic analyst contacted by The Al-Hajj “all these gains are likely to be lost if government does not react appropriately in the next few weeks.”