Depreciation of cedi affecting oil importers, causing price hikes – Senyo Hosi

The managing director of the Ghana Chamber of Bulk Petroleum Distributors, Senyo Hosi, said the depreciation of the cedi is largely responsible for the rising cost of petroleum products which by extension affects the prices of other things such as transport and food prices.

The Chamber of Petroleum Consumers has predicted that from tomorrow, Wednesday, March 16, 2022, prices for petroleum products will see a spike, with consumers having to pay GHS 10 per litre.

While reacting to the prediction, bulk oil distributors also blamed the situation on market volatility as well as the rising cost of crude in the international market.

Speaking on the Citi Breakfast Show with Bernard Avle, Senyo Hosi, said that “the depreciation of the cedi has been quite heavy for oil importers. For example, at the start of this window which started on March 1, it was estimated that over the next two months the exchange rate would be around GHS 7.8, because when we sell, we do so on credit.

“It takes us about 45 days to collect the money, then we spend another 15 days to convert and pay your suppliers in dollars, and we assumed GHS 7.8 would be the price. GHS8 Now, because we don’t have an active futures market, a foreign market dedicated to the oil industry, speculation is skidding and to move on to the next, we have to speculate higher.

Speaking on the same scheme, Director General of the Association of Petroleum Marketing Companies, Kwaku Agyeman Duah, said it was high time the government introduced subsidies to mitigate the impact on the market.

“Obviously when we get to that point, what the state can do is subsidize. We need a well-targeted subsidy. Because we don’t have a functioning transit system, that affects us. If there had been something like that, the government could have handled it. Now all we can do is subsidize.

The Ghana cedi has recently come under severe strain, depreciating against major trading currencies, including the US dollar.

Between January and March 2022, the currency lost more than 14% of its value, a very significant drop compared to previous developments.

The development leads to an increase in the cost of products in the country, especially cement and fuel.

The government has yet to make a direct statement on what steps it is taking to address the issue, although various stakeholders have made suggestions.