Ghana 
Unions protest as Ghana removes fuel subsidies

afrol News, 21 January - Following the sudden government decision to end fuel subsidies, petrol prices in Ghana have almost doubled. Trade unions are outraged, claiming government had no right to provoke such a price hike without consulting and assisting stakeholders. Increased poverty was expected to be a result. 

Private and public transport prices are set to hike immediately, along with food and other prices, due to these increased transport costs, the Ghanaian Trades Union Congress (TUC) warned. There was an urgent need for a new government income policy that would "enable workers to absorb to changes in the prices of petroleum products as well as a transport policy," TUC stated.

Ghana's Energy Minister Albert Kan Dapaah recently announced the increases in the prices of petroleum products in order to cut government spending. The Minister said government could no longer afford to subsidise the indebted state-run oil Tema Oil Refinery, which is reported to have accumulated debts of 4.5 trillion cedis (approximately US$ 525 million). The current shortfalls in hydroelectric power further had increased Ghanaian oil imports and the refinery's debt. Also the record high oil prices had contributed to make the refinery's debt unmanageable.

Minister Kan Dapaah said the combined effect of rising crude oil prices and cedi depreciation in recent times had had "a dramatic effect on the cost of petroleum" fro the Tema refinery. "Crude prices fell in the second hall of 2001 but during 2002, crude oil prices started rising once again with dramatic increases in the latter part of the year because of the events in Iraq and, of late, in Venezuela," he explained. Today, the barrel price of crude oil is around US$ 32.

- The grave consequence of our low pricing is that it has generated a huge smuggling industry around our borders possibly adding an extra 25 percent to our oil imports, the Minister added. "The mounting losses are clearly unsustainable and if left unchecked, can cause permanent damage to our economy." The only solution was to see to that there "must be no further accumulation of petroleum debt," the government had concluded.

TUC Secretary-General, Kwesi Adu-Amankwah, however found it unacceptable that Ghana's consumers should be given such a massive economic shock. Addressing a news conference in Accra, the trade union leader said it was "not permissible" for the Ghanaian government to subject the pricing of petroleum products to full cost recovery and automatic price adjustment "without first instituting appropriate measures for safeguarding the well being of the people." 

Mr Adu-Amankwah expressed TUC's disappointment over the manner of consultation government made with it in the run-up to the announcement of increases in the prices of petroleum products. The TUC leader therefore had called on government to develop a process of collective consultation and popular participation in economic decision-making. According to TUC, that process of collective consultation could be developed by "engaging all stakeholders together in assessing the rate of increase and impact and also, in agreeing on the accompanying remedial measures for the well-being of the people." 

The TUC leader further answered Minister Kan Dapaah, holding that "the cedi would sooner than later slide substantially against the hard hike in the cedi prices of petroleum products." Mr Adu-Amankwah said this situation could be aggravated by an external shock such as an impending Gulf War. He therefore called on the US and Britain to "stop beating the war drums in the Gulf region and to allow the UN to champion negotiations in resolving the crisis in the region." 

Also the Ghanaian opposition has reacted with shock to the government decision to end fuel subsidies. The price was set to worsen the economic situation of all Ghanaians and the country's businesses, it was heard. Some opposition leaders called for "resistance" against the price hike.

The Ghanaian government, on the other hand, has stated its willingness to somewhat alleviate the consequences of the increased fuel price. The plans included a massive improvement in the public transport services, as 600 buses had already been ordered from abroad. Also, a committee had been tasked "to agree on a new minimum wage by the end of next week," Minister Kan Dapaah informed. The government was also to "open up the refinery business to private sector participation and competition."

Sources: Based on Kaiser, Ghanaian govt, TUC and afrol archives

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