Depreciating Cedi to erode projected fuel price reduction

Despite a decline in global petroleum prices, fuel consumers in Ghana are unlikely to benefit from the expected decrease in pump prices due to the rapid depreciation of the cedi.

The second petroleum pricing window for May began on Thursday, May 16, with analysts predicting a marginal decrease in prices, but the cedi’s depreciation is expected to offset this decrease.

International market trends show a significant decline in refined petroleum products, with petrol and diesel prices falling by 5.68% and 4.51%, respectively, according to the Institute of Energy Security.

However, the cedi’s depreciation, which has lost 8-10% of its value in the past two weeks, is expected to negate this decrease, leaving consumers with minimal relief.

Derrick Xaste, research and policy analyst of IES, speaking to Citi News predicted a minimal reduction in prices, around 2%, due to the competitive pricing strategies of oil marketing companies (OMCs).

“We expect prices to reduce but not significantly. If it hadn’t been for the cedi depreciation, the reduction would have been more significant. We expect some form of reduction, but you know the forces of demand and supply and the competitive pricing strategies by the various OMCs might bring some sort of slight reduction because they are all competing for the same consumer base.”

“I cannot predict for them because they all have their pricing strategy, they will equally also make a move depending on their other competitors what they’ll be doing so I cannot take that decision for them but definitely that reduction cannot be more than 2 percent.”

Meanwhile, the Executive Director of the Chamber of Petroleum Consumers, Duncan Amoah has warned that prices may remain stable or even increase if the cedi continues to depreciate.

As of the first day of the pricing window, major OMCs like Goil and Total Energies had maintained their prices, with petrol and diesel selling at GHc14.40 and GHc14.65, respectively.

Consumers are urged to prepare for possible price increases if the cedi’s depreciation continues, highlighting the complex interplay between global market trends, currency fluctuations, and local pricing strategies