15th August
Economist, Dr Paul Appiah-Konadu, has identified rising energy prices as one of the major threats to Ghana’s recent macroeconomic gains.
Engaging the press on Ghana’s recent economic gains, Dr Appiah-Konadu stated that increases in fuel prices could quickly affect transport fares, electricity costs, household expenditure and ultimately lead to inflation.
Dr Appiah-Konadu therefore urged the government to closely monitor the ongoing developments in the international energy market so as to take calculated measures to cushion households and businesses from rising costs.
“One key thing is fuel prices, because energy prices affect everyone, directly and indirectly,” he said.
Dr Appiah-Konadu further noted that higher fuel prices could also increase electricity costs due to the country’s heavy reliance on fossil fuels for power generation.
“Whenever the price of these elements go up, it also feeds into your cost of electricity. And so the government has to watch the fuel prices, especially now that the Middle East crisis is ongoing,” he cautioned.
The economist then urged the government to consider reviewing some taxes and levies on some petroleum products, particularly during periods of significant price increases.
He also questioned Ghana’s significant expenditure on the importation of refined petroleum products despite its production of crude oil domestically.
According to him, increased investment in domestic oil refining and natural gas production can go a long way to helping reduce Ghana’s exposure to international energy price shocks.
“Why can’t you refine the oil here? Because once we are refining it, we can price it in cedis because the cost elements will be in cedis,” Dr Appiah-Konadu argued
He added that strengthening domestic refining capacity could also reduce pressure on the cedi by lowering the country’s demand for dollars to purchase refined petroleum products.
“We can insulate ourselves from those pressures, refine the oil here,” he said, adding that reviving domestic refining could help “tame the cost of energy in Ghana” and provide households and businesses with more affordable energy.
Dr Appiah-Konadu also stressed that affordable energy was essential for industrial growth, particularly for businesses expected to operate under the government’s 24-hour economy initiative.
He questioned how businesses struggling to meet their energy costs during normal operating hours could be expected to expand into 24-hour production.
“If a business cannot operate on an eight-hour cycle because of the high cost of fuel, why would such a business be incentivized to move to a 24-hour cycle?” he asked.
He therefore called for targeted energy support for manufacturing and agro-processing businesses with the potential to expand production, create jobs and contribute to Ghana’s economic transformation.
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