Ghana has cut fuel subsidies following an increase in crude oil prices and the depreciation of the Ghana cedi currency, the head of Ghana’s National Petroleum Authority (NPA), said in a statement on Thursday.
Ghana, which joined the club of oil producers in West Africa last year, had come under pressure from the International Monetary Fund to remove the fuel subsidies.
The IMF has urged countries across West and Central Africa to cut fuel subsidies, which they say are not effective, but do promote corruption and smuggling.
The past months have seen governments in Nigeria, Guinea, Cameroon and Chad moving to cut state subsidies on fuel.
Alex Mould, the Chief Executive Officer of NPA, said the cumulative effect of the rise in crude oil prices this year and the about 5.7 per cent depreciation of the cedi meant a 25 per cent increase in cedi terms .
The conditions are in the cost of procuring crude oil and petroleum products since January. Mr. Mould said Ghana has spent about 450 million cedis on fuel subsidies in 2011.
The price change effective from December 29, will see the cost of Liquefied Petroleum Gas (LPG) increase by 30 per cent, while petrol and diesel will go up 15 per cent at the pump.
Mr. Mould said the NPA would be monitoring crude oil prices and will not increase or decrease pump prices if the average crude price stay within the 107-110 dollars per barrel range.
Brent crude rose 4 cents to 107.60 dollars a barrel on Thursday, after falling nearly two dollars the day before.
Meanwhile, the Ghana cedi was trading at 1.6370/95 to the U.S. dollar.
Ghana’s Minister for Finance, Kwabena Duffour, said the removal of subsidies would have a positive impact on Ghana’s economy.
“Subsidising fuel is not sustainable,” Mr. Duffour told Reuters.
“It is the right thing to do, so we can sustain our fiscal consolidation.”