The Politics Of Petroleum Pricing.

What can be done to save us?

The Chief Executive of the National Petroleum Authority (NPA) Mr. John Attafuah told the Ghanaian Times on 16th February 2006 that, the recent increases on Petroleum products, has been necessitated by the rise in Crude oil price on the world market, as a result of the Iranian Nuclear and Nigerian oil hijacking crises.

Mr. Attafuah was quoted to have said that, Ghanaians will now have to contend with a system of regular adjustments so that we can all face the realities on the world market. He advised Ghanaians to consider the benefit of fuel conservation by being more prudent in their consumption patterns. This way he said, we may be able to save the environment and also save money for other purposes.

Petrol sells at 34,850 Cedis. Gas oil sells at, 32,000 Cedis, and Kerosene sells at 24,500 Cedis. The Increases were 10 % of their previous Prices. There is nothing wrong in periodic Petroleum price adjustments as Mr. Attafuah has cautioned, but we need to do better beyond Petroleum price adjustments; Sir.

The inference of Mr. Attaffuah?s advice I believe is that, those who own private cars must learn to ride in Public Transport like Buses, (TroTro) and Taxis. Alternatively, if a group of people live and work in the same area like the Ministries, they will save a lot if they pull together and alternate rides week by week. That is a good and reasonable advice.

Everybody knows that Ghana do not produce crude oil but for some to argue that our neighboring countries and especially Nigeria which produces oil, even sells petrol at a much higher price than Ghana, and therefore should not complain about the present increases, is to me, Flimsy and unacceptable. The Economies of Nigeria and the neighboring countries; and for that matter the rest of the world are not the same. Nigeria?s population is about 7 times larger than that of Ghana and that is a big factor among others to determine a country?s annual projections. Based on Nigeria?s population it is not surprising at all that petrol sells much higher than in Ghana even though they produce crude oil. If we do our home work well, Ghana can sell Petrol for about 25,000 Cedis.

Mr. Attafuah?s advice for the public to be prudent in the use of Petrol, is most welcome however, I would have wished that he directed his call also to the Government and all Government Officials to limit the use of State official cars which of course are run at the expense of the Tax Payer and save money for the country. Charity they say begins at home, therefore, saving money through conservation and prudent use of Petrol, should begin from the top. Therefore, an announcement from Mr. Attafuah that the FREE 80 or more gallons petrol allocation to all Government officials and Parliamentarians has been reduced to 30 Gallons as a means to conserve and saving money for other purposes would have been indeed, most selfless and welcome news.

Mr. Attafuah?s statement indicated that, Ghanaians will now have regular adjustments on Fuel prices so that (WE) CAN ALL FACE THE REALITIES ON THE WORLD MARKET. I do not think Mr. Attafuah buys petrol out of his pocket, by his position as the Chief executive of the National Petroleum Authority (N.P.A) so who and who was he referring to as, WE CAN ALL FACE THE REALITIES OF THE WORLD MARKET? If my guess is right, then he enjoys a free car and petrol at the expense of the Tax payer and therefore, facing the realities of the World market price hikes will never affect him, just as it does not affect any of the top Government functionaries. THAT IS WHY THEY DON?T CARE HOW HIGH THE PRIZE OF PETROL GOES UP. His statement is therefore hypocritical.

THE REAL PRODUCTION COST OF PETROL, I am not very sure of the real production cost per gallon of Petrol from the Tema Oil Refinery (T.O.R) Nobody will tell you this because it is a classified information. That is why I captioned this article ?THE POLITICS OF PETROL PRICING?. For the sake of my argument, let me say that the Production cost per gallon of Petrol, at the (T.O.R) is about 16,000 Cedis to 18,000 Cedis Maximum. Let me assume that the Pump price of 34,850 Cedis per gallon of Petrol, gives the pump owners about 3,850 Cedis a gallon for overheads and all other operational expenses. 18,000 Cedis plus 3,850 Cedis equals 21,850.Cedis. Therefore 34,850 Cedis minus 21,850 Cedis comes down to 13,000 Cedis which may be accrued to Government as probable Customs and Excise Taxes just on a gallon of Petrol. Talk about Gas oil and Kerosene and Liquefied Petroleum Gas (LPG).

No country can develop or pay its workers without Taxations. I have no problem with taxations but it appears Our Governments have always looked at the cheapest and easiest way to taxation, while there is a cumbersome Gold mine out there within the informal sector of the economy to tap into. We live in a Country where majority that are in the informal sector of the economy do not pay Taxes at all. Our Leaders, past and present have not been bold to reform the complexities in our system in order to expand the Tax base. Nothing is easy in this world but nothing is also impossible in this world.

It is a common economic fact that prices of good and services especially food and transportation is dictated by Petrol prices and the higher the prices, the untold hardships that are brought unto the very poor in the society. I believe we can sell petrol cheaper than 35,850 Cedis and make life bearable and meaningful for all Ghanaians, if the Government can tap into what I call the Gold mine out there in the informal sector of the economy. THAT IS WHAT OUR LEADERS ARE THERE TO DO. REASON AND COME UP WITH SOLUTIONS TO PROBLEMS, AND NOT JUST SIT IN THEIR ARMCHAIR AIRCONDITIONED OFFICES.

Let me give one typical example. I have personally paid a lot of handymen on my projects and I have paid my mason alone about 30 million Cedis during the past year 2005. This man worked on other projects besides mine, and therefore, let us calculate his total annual income for the past year 2005 to about 80million Cedis. This man claims he has never known in his life time what income Tax is all about. He has never paid income tax but he makes money more than the Principal Secretary at the Ministry. Assuming there are Five Thousand masons in each region, can we imagine the amount of potential Taxes Government has not been harnessing? Now, that statistics only talks about Masons; count the other numerous self employed handymen like Carpenters, Plumbers, Electricians, Auto Mechanics, Welders, Seamstresses, Hair dressers, Chop Bar operators and above all the Market mums. ARE OUR LEADERS RREALLY SERIOUS?

Let us be creative and innovative. There are billions of Cedis out there that can if harnessed, go a long way to cool our overheated Economy. Let us organize these various artisans and all the rest within the informal sector into cooperatives with secretariats and have them registered by their respective secretariats for Tax ID numbers, fed into a central data base. The cooperatives should be efficiently organized to act as a Liaison between the members and the revenue services department .There must be a nationwide civic education at days set aside for such public education when all registered members must be obliged to attend. The education should be centered on the topic YOUR TAX OBLIGATION AND NATIONAL DEVELOPMENT. These artisans should be giving Loans to expand their businesses and those who do not register with the cooperatives after one year of its operations will be barred from doing any business, and violators should be prosecuted for disregarding the Law.

It is definitely going to have some challenges yes, there is no easy way to life unless the few that are born onto mountings, as an old adage indicate, It takes no time to grow tall if one in born onto a mountain. We must recognize that we have problems and even though it has taken us too long to discover some of our potentials, it is never too late. Let us start from somewhere and create our own wealth from within and manage it efficiently. If we can harness all the economic potentials and every Ghanaian pays a fair share of Taxes, there is no reason why we can not sell petrol cheaper and protect our boarders against smuggling. In all Nations, people do not want to pay Taxes so it is the duty of Governments to create an enabling atmosphere for tax collection. Previous and Present Governments have not done enough in this area to broaden Taxations, and that is why Import Duties on especially Cars and Taxes on Petroleum products remain very high because those are the two easiest areas for revenue collection. As a result of over reliance on the Word Bank and IMF, we have refused to be creative and innovative for our Own Economic growth and sustenance. WE MUST START NOW.

God bless our homeland and our People.