Declining value of the Cedi may undermine the expected decrease in fuel prices
Despite the downward trend in global petroleum prices, Ghanaian fuel consumers are unlikely to experience the anticipated reduction in pump prices due to the rapid depreciation of the cedi.
The second petroleum pricing window for May commenced on Thursday, May 16, with analysts forecasting a slight decrease in prices.
However, this anticipated decrease is expected to be offset by the sharp depreciation of the cedi.
According to the Institute of Energy Security, international market data indicates a significant decline in refined petroleum product prices, with petrol and diesel prices dropping by 5.68% and 4.51%, respectively.
Nonetheless, the recent depreciation of the cedi, amounting to 8-10% in the past two weeks, is projected to nullify any significant decrease in fuel prices, resulting in minimal relief for consumers.
Derrick Xaste, a research and policy analyst at IES, explained that due to competitive pricing strategies among oil marketing companies (OMCs), the expected reduction in prices may be modest, around 2%.
Xaste stated, “We expect prices to reduce but not significantly. If it hadn’t been for the cedi depreciation, the reduction would have been more significant. We expect some form of reduction, but you know the forces of demand and supply and the competitive pricing strategies by the various OMCs might bring some sort of slight reduction because they are all competing for the same consumer base.”
He cautioned that it is difficult to predict pricing decisions by individual OMCs, but emphasized that any reduction is unlikely to exceed 2%.
Meanwhile, Duncan Amoah, Executive Director of the Chamber of Petroleum Consumers, cautioned that fuel prices could either remain stable or rise further if the cedi continues its depreciation.
As of the first day of the pricing window, major OMCs like Goil and Total Energies maintained their prices, with petrol and diesel retailing at GHc14.40 and GHc14.65, respectively.
Consumers are advised to brace themselves for potential price hikes if the cedi’s depreciation persists, underscoring the intricate relationship between global market dynamics, currency fluctuations, and local pricing policies.
