Adu Koranteng Writes
As the Ghanaian Cedi gains strength against the U.S. dollar, many consumers naturally expect a corresponding drop in petroleum prices at the pump. After all, fuel is imported and priced in dollars, so a stronger Cedi should mean cheaper fuel. Yet, despite recent currency appreciation, pump prices remain stubbornly high. Why?
To understand this, we must examine how fuel prices in Ghana are actually determined. The National Petroleum Authority (NPA) oversees a deregulated pricing regime that reviews fuel prices every two weeks. This regime follows a structured formula—one that goes far beyond just the exchange rate.
Breaking down the Pricing Formula
As of the March 16–31, 2025 pricing window, the average ex-pump price for petrol and diesel stood at GHS 15.49 per litre. Here’s how that price was built:
- Ex-Refinery Price – GHS 9.4320 per litre (60.9%)
This is the cost at which Oil Marketing Companies (OMCs) buy fuel from importers. It’s influenced by:
World market prices of refined petroleum products.
Freight and insurance costs.
The exchange rate—a stronger Cedi makes imports cheaper.
Thus, the ex-refinery price is where exchange rate movements have the biggest impact.
- Taxes and Levies – GHS 3.2700 per litre (21.1%)
These are government-imposed charges that do not fluctuate with the exchange rate:
Energy Debt Recovery Levy
Road Fund Levy
Special Petroleum Tax
Price Stabilisation and Recovery Levy
BOST Margin
These taxes are fixed in Ghana Cedis and often remain unchanged, even when the Cedi strengthens.
- Dealer and Marketing Margins – Estimated at GHS 2.7880 per litre (18.0%)
These margins compensate OMCs, dealers, and transporters. They are set by the NPA and typically reflect domestic inflation, operational costs, and other factors unrelated to global oil prices or forex rates.
The Final Picture
So while Cedi appreciation does help by reducing the cost of imports, it only affects a portion of the overall price. Unless global oil prices fall or government taxes are adjusted, the full benefits of currency strength may not reach the consumer.
Conclusion
Ghanaians are right to expect lower fuel prices when the Cedi strengthens. But under the current pricing framework, exchange rate improvements alone are not enough to cause major reductions. Real relief at the pump may require a comprehensive review of taxes, margins, and pricing transparency. Enditem
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