Recent events on the international oil market have left many oil-dependent countries singing a popular and by now familiar chorus: our economy is hurting due to a fall in oil revenue. Countries such as Russia, Venezuela, Nigeria, Canada, Saudi Arabia, Lybia etc fall into this category. Despite this drop, they have exhibited good faith and reasonableness and have subsequently reduced the prices of gasoline for their citizens. We should note that none of these countries uses an automatic adjustment formula to price their petroleum products.

Their main motivation in reducing prices derives from two main ideas; reasonableness and potential public outcry for justice and accountability (working through the legal system). Average price of regular gasoline for instance stood at $2.157 per gallon in the USA as at January 10, 2015, a 34.85% reduction from the $3.311 average price a year ago. The table below shows the oil price levels as at January 5, 2015 in some selected countries.

COUNTRY	PRICE/GALLON (USD)
VENEZUELA	0.06
RUSSIA	2.28
SAUDI ARABIA	0.59
SYRIA	0.19
NIGERIA	1.96
LYBIA	0.45
GHANA	3.59

Source: http://www.globalpetrolprices.com/gasoline_prices/

It is worth noting that most of these oil-producing countries go to the extent of even intentionally keeping their fuel prices low to benefit their citizens. However, this is not the case in Ghana.

Unlike any of these oil-dependent economies, Ghana cannot be classified as oil-dependent because the figures are not even appealing to that idea. It’s been a little over 5 years now since we started producing oil in ‘large quantities’ (the popular phrase). The economy had been doing ‘just fine’ with cocoa and other products way before we struck oil. We have barely made anything from the oil exports. For the little we have raked in, there is yet very little to show for. These oil revenues have come and gone un-noticed. So what is this saying that the economy will hurt if we reduce prices further. What difference will it make? In any case, don’t we now even buy oil cheaper on the international market?

Consider the amount of expenditure reduction coming from that trade. Well, at this point I know what you are thinking, but hold on, we don’t get ‘anything’ from our exports so don’t even make that argument.  What government is doing now is to short-change Ghanaians -- well-meaning Ghanaians. This is the height of arm-twisting by one’s own government. We all know that agriculture is still the backbone of the country and not some five-year old oil industry.

Perhaps more interesting is the fact that at the start of 2014 the National Petroleum Authority (NPA) introduced the almighty automatic adjustment formula to price petroleum products. This was to settle pricing disputes witnessed in the past. Needless to say they abided by this formula religiously and held on to it closely and tightly like a first love, well, until oil prices began to dip. The non-applicability and non-feasibility of the well-known formula was laid bare for all to see. In periods when prices were continuously rising, irrespective of the extent of public outcry, the NPA and government paid no attention and always went ahead to increase the prices of petroleum products. Several months down the line, the tables have turned, perhaps not completely.

As we would have expected, the relevance of the automatic adjustment formula broke down as the NPA purposefully failed to apply the formula totally, resorting to ad hoc pricing of yesteryears. As expected it got the backing of government. The automatic adjustment formula now appears to be a formula of convenience. When it’s in our favour let’s use it, otherwise, ignore it.  The chorus has become louder and more disturbing to the ears; ‘revenue from exports are falling’ and we cannot reduce local prices. The NPA and government seem to back each other in singing this international chorus in unison, although with different tones.

On the part of the NPA, it is simply that they cannot reduce prices until they have settled all the debts owed the Bulk oil Distribution Companies (BDCs) by government. This statement is a direct insult to the rights and intelligence of Ghanaians and a spat in the face. It would have even been better if they kept this to themselves. Knowing about it is all the more insulting. As far as we are concerned as citizens and residents of Ghana, we have been paying the full pump price for fuel. Nobody has been buying fuel on credit. To owe the BDCs and make the ordinary Ghanaian suffer for that is at best insensitive. Inefficiencies of our governments cannot be visited on us as innocent citizens and residents. I suppose someone may be thinking of this debt as resulting from the government subsidies on petroleum products.

Well, the good news is that government started a programme to remove these subsidies and now they do not form a major part of the actual price we pay for fuel. In any case, we should not resort to political gimmicks and fantasies to implement policies without due analysis on their feasibility and sustainability. To say that fuel prices will not be reduced until the debt owed BDCs have been fully paid begs the question; was there ever a subsidy programme? Certainly not! If we are paying for these debts now, then we can best describe this policy as a form of deferred taxation (pushing current taxation to future periods). In essence we are now paying for the difference in the cost of fuel which we should have paid years ago if there were no subsidies.

The government made us believe it was shouldering this cost, but in essence it was only deferring it to the future for us to pay. That was smart, perhaps not too smart of them. The government should desist from providing free fuel to the numerous government functionaries and other institutional heads. Make every one of these people buy their own fuel; afterall they are paid just as everyone for their work. Remove the waste and leakage from the system and we shall be on course to efficient pricing.

Government on its part has simply been saying; we cannot reduce prices further (after a 10% decrease) because it will hurt the economy. Sure, the economy will hurt but not from the fact that oil revenues will fall but that general price levels will fall and may lead to unemployment with its spiral effects. But why would we even think price fall will hurt the economy when price increase failed to do more damage. The economy of Ghana is not in those realms of macroeconomics yet. It is still a developing economy and not efficient. So if the only reason why government is saying fuel price reduction will hurt the economy is due to oil revenue reduction then that is a cheap talk. We are not buying that. First of all, as noted earlier, we do not gain much from oil exports.

Secondly, for the little we make, there is no accountability for it and obviously does not form a major part of the nation’s budget. It is not a major source of revenue. We have been coping without oil up until early 2009. What has possibly changed with the discovery of oil? We are still agrarian with cocoa still our major export revenue earner. Reducing fuel price beyond 10% will have no significant impact on the economy. If anything, it will reduce the cost of doing business, forcing producers to reduce their output prices and everyone will be happy.

Perhaps the most effective way of keeping our governments in check is through public criticism and demand for accountability. Generally, Ghanaians have been perceived as all accommodating and not as radical enough as some of our neighbours and the popular Arab spring participants who get their governments to do right by raising their voices together as one, irrespective of political affiliations. This impression has caused successive governments to take Ghanaians for granted - that we don’t have the teeth to bite. Instead of fighting as a people, we find ourselves divided on political ideologies on matters even as pertinent as simply reducing fuel prices, making our educational system work again, punishing corrupt officials, making NHIA, SADA and GYEEDA work again, and a whole lot more.

An attempt to politicize every issue in the country has successfully given politicians superiority over the rest of the populace. It has gotten to the point where minority opposition parties have to fight government alone with the rest of the people standing aloof, unconcerned as always and just murmuring…’they are all the same’. Well, if they fail in their fight, the consequence hits us all. But should we wait till it gets to such a stage.

I can forgive the rest of the population and hold our lawyers to account for the impunity being displayed by government. It is high time lawyers realized that their calling is not for monetary gains only, but also to serve  as the voice of the people and hold government to account through the law courts, because they know the law best. Or are they waiting for a non-lawyer to hire their services to institute a legal action against government? What happened to pro bono cases? As long as our lawyers keep silent leaving the fight for the people, then the people can only succeed by resorting to violence (exactly what happened in other countries), which is inimical to development. In sum our lawyers have failed us!

Of particular concern is the Office of the Attorney General which I perceive as a failed state institution which needs to be restructured. On almost a daily basis you hear state prosecutors asking for adjournment of cases because they are still investigating, or that the witness failed to appear in court. It gets disheartening that for these two popular reasons always cited, cases drag for years. We are getting tired of hearing about the same cases mentioned over and over again.

There is a lack of willingness on the part of state prosecutors to ensure justice for the state (perhaps it’s not in their interest). A classic example is the recent cocaine issue involving one Nayele Ametefeh and her accomplices which surfaced in December 2014. Whereas British authorities have finished prosecuting the matter and sentenced Nayele (the main suspect) to 8years and 8 months in prison, their Ghanaian counterparts are still on the road of legal romance, trying to decide whether the case against her accomplices should go on trial or not.

The recent court hearing was adjourned because…your guess is right…the state is still investigating the matter, not forgetting that on 22^nd December, 2014 the state prosecutor even failed to appear in court. So what does the British legal system have and know that its Ghanaian counterpart is not blessed with? COMMITMENT! If state prosecutors feel and think they are doing harm to any Ghanaian by not showing commitment to prosecute cases, they should come again; they are taking away the very essence, trust and prestige associated with their noble and learned profession.

Having said all these, I implore the lawyers of our land to take charge and ensure the government does the right thing. They should be forced to continue using the automatic adjustment formula, at least that’s what they used to do when prices were going up. It shouldn’t be a formula of convenience.

 

 

By:      Frank Ofori-Acheampong

fka.ofori@gmail.com