Ghana's Chamber of Petroleum Consumers (CPC) forecasts a price reduction at the pumps for petrol and diesel, starting from the second pricing window of January 16th, 2025. The CPC projects a 3% decrease in petrol prices and a 1% decrease in diesel prices. However, this prediction hinges significantly on the performance of the Ghanaian cedi against major international currencies.
Recent Price Increases and Market Volatility
The first pricing window of January 2025 witnessed a slight upward adjustment in fuel prices. State-owned GOIL increased petrol prices from GH¢14.75 to GH¢14.99 per litre, and diesel from GH¢15.45 to GH¢15.60 per litre. Other Oil Marketing Companies (OMCs) followed suit, reflecting the fluctuating international oil market and the cedi's exchange rate.
The Cedi's Crucial Role
The CPC's Executive Secretary, Duncan Amoah, highlights the cedi's volatility as a key factor influencing fuel prices. He notes that while some market indicators suggest an upward trend for the cedi, others show continued depreciation. This uncertainty makes predicting accurate price changes challenging. Amoah emphasizes that while international market benchmarks indicate a potential price reduction, the cedi's performance will ultimately determine the final price adjustments.
Bank of Ghana's Intervention
The Bank of Ghana (BoG) recently held its first forward foreign exchange auction of 2025, allocating $20 million to Bulk Oil Distribution Companies (BDCs). This initiative aims to manage foreign exchange reserves and stabilize the exchange rate. The auction, with a 30-day tenor and a mid-forward rate of 14.94, is one of six planned bi-weekly auctions for the first quarter of 2025, totaling $120 million. The next auction is scheduled for January 29th, 2025.
Concerns Over Forex Allocation
Despite the BoG's intervention, Amoah advocates for a more substantial approach to addressing the forex needs of BDCs. He argues that the current allocation of $50-100 million is insufficient to significantly impact the cedi's exchange rate and calls for a more sustainable program, suggesting a need for $400-500 million to effectively manage the forex demands of the petroleum sector.
The success of the price reduction projections therefore depends heavily on the BoG's ongoing efforts to stabilize the cedi. The coming weeks will reveal whether the projected price decreases materialize as anticipated.
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