The African Centre for Energy Policy (ACEP) has called on the government to immediately apply the accumulated GH¢948 million in the Price Stabilisation Regulatory Levy (PSRL) account to cushion petroleum consumers from high prices of petroleum products.
The Executive Director of ACEP, Mr Benjamin Boakye, who made that call, said since the levy was established to alleviate the burden of higher petroleum prices on the public, it was important to utilise the accumulated balance to cushion consumers from the current high oil prices.
He made that call in response to the decision of the National Petroleum Authority (NPA) to zero-rate the PSRL on petrol, diesel and liquefied petroleum gas (LPG) for the next two months.
The NPA announced its decision in a press release dated October 11, 2021 in the midst of recent public outcry over the upward fuel price adjustments at the pump.
The fuel prices have been increased to reflect the surge in crude oil prices on the global market and the depreciation of the cedi.
Mr Boakye said while consumers of petroleum products would naturally welcome the reduction in prices, there were more questions that needed answers as far as the PSRL was concerned.
"Simply zero-rating the PSRL for two months creates the assumption that government does not intend to activate the price stabilisation purpose of the PSRL, thus raising the fundamental accountability question of what government intends to use the estimated balance of GH¢948 million in the PSRL account for," he said.
For instance, he said the decision to zero the PSRL for the next two months called into question the efficiency of the levy and the delivery of its purpose.
The PSRL was established in 2015 under the Energy Sector Levies Act (ESLA), 2015 (Act 899).
Section 5 (1) of Act 899 states: "The Minister shall cause to be opened and maintained an account to be known as the Price Stabilisation and Recovery Account (PSRA) for the purpose of receiving money realised from the PSRL.”
According to section 5(2 a-c): "Money in the PSRA shall be used as a buffer for under recoveries in the petroleum sector; to stabilise petroleum prices for consumers; and to subsidise premix and residual fuel oil."
The ACEP boss explained that between 2016 and 2019, consumers of petroleum products paid 12 pesewas per litre on petrol, 10 pesewas per litre on diesel and 10 pesewas per kilogramme on LPG as PSRL.
He said the levy was adjusted upwards in 2019 to 16Gp per litre on petrol, 14Gp per litre on diesel and14Gp per kilogramme on LPG. The adjustments took effect in 2020.
Mr Boakye revealed that based on the consumption data of petroleum products between 2016 and the half year of 2021, the PSRL was estimated to have cumulatively raised about GH¢2.53 billion, out of which an average of 50 per cent was estimated as subsidies for premix fuel and residual fuel oil (RFO).
"Adjusting for 25 per cent non-collection rate or theft by some Oil Marketing Companies (OMCs), the PSRL is estimated to have cumulatively raised about GH¢1.89 billion. Out of this amount, about GH¢948 million is expected to have been cumulatively spent on subsidies, leaving about GH¢948 million as the balance of the account, given that the levy has never been used to stabilise prices since it was imposed in 2015," he explained.
He observed that in the current escalating price regime, the application of the PSRL for its legally established purpose was an easier and more responsive approach to cushion consumers than what the NPA proposed.
Mr Boakye also said the application of the levy, as established by law, did not require parliamentary approval.
"Therefore, it is intriguing that the NPA prefers that citizens wait for Parliament, currently in recess, to grant a two-month suspension of the PSRL when there is accumulated cash to assuage the suffering of the consumers immediately," he said.
He said the prices of a litre of petroleum products had increased by about 33 per cent this year; and those increments introduced significant cost burden for the productive sector and the average Ghanaian.
Mr Boakye called for a holistic review of the downstream price mechanism through the dual regulatory spectrums: taxes and levies from the government.
He observed that petroleum products had become the easiest avenue to tax within the last decade, with the periodic introduction of new taxes and upward adjustment of existing ones.