On March 15, 2022, Senyo Hosi, CEO of the Ghana Chamber of Bulk Oil Distributors, highlighted the depreciating Ghanaian cedi as a primary driver of rising petroleum product costs, per. Speaking on the Citi Breakfast Show with Bernard Avle, Hosi noted, “The cedi depreciation has been quite burdensome on the petroleum importers,” attributing price hikes to the cedi’s 14% value loss against the US dollar from January to March 2022, per. The Chamber of Petroleum Consumers forecasted that fuel prices would hit GHS10 per litre starting March 16, 2022, a significant jump driven by the cedi’s decline and global crude oil market volatility, per.
Impact on Petroleum Importers
Hosi explained the operational challenges faced by importers, stating, “At the beginning of this window that started from 1st of March, it was estimated… the exchange rate will be about GHS 7.8… Today, we are practically at GHS8,” per. The 45-day cash collection period and 15-day conversion to dollars for supplier payments exacerbate the issue, as importers face unpredictable exchange rates without an active forward market for the oil industry, per. “The speculation gets out of gear,” Hosi added, noting that importers must now speculate higher rates for future transactions, further driving costs, per.
Call for Government Subsidies
Kwaku Agyeman Duah, CEO of the Association of Oil Marketing Companies, also on the Citi Breakfast Show, urged the government to introduce targeted subsidies to cushion consumers, per. “Obviously, when we get to this stage what the state can do is to subsidize,” he said, emphasizing the lack of a robust public transportation system as a complicating factor, per. Duah suggested that subsidies could mitigate the impact of fuel price hikes, which ripple through to transportation and goods, contributing to Ghana’s rising cost of living, per.
Broader Economic Context
The cedi’s 14% depreciation in early 2022, per, worsened Ghana’s import-driven inflation, with fuel and cement prices rising sharply. This aligns with reports of a 40.4% inflation rate in October 2022, driven by higher fuel and food costs, per. The absence of a government pronouncement on specific interventions left stakeholders frustrated, though suggestions like subsidies and stabilizing the cedi were floated, per. The Bank of Ghana’s limited foreign exchange supply, covering only 30% of importers’ needs, further strained the sector, per.
Challenges and Proposed Solutions
The lack of a dedicated foreign exchange market for oil importers, as Hosi noted, amplifies speculative pressures, per. Combined with global crude oil price surges—exacerbated by events like Russia’s invasion of Ukraine in February 2022—the cedi’s decline significantly impacts Ghana’s import-dependent economy, per. Stakeholders have proposed measures like subsidies, export diversification, and fiscal discipline to stabilize the cedi and reduce reliance on imports, per. Without prompt action, rising fuel costs risk further inflating prices of goods and services, deepening economic hardship in 2022.
