The Ghanaian government plans to suspend a GH¢1-per-liter levy on diesel for October and November, shifting the mechanism through which it is cushioning consumers from higher fuel prices.

The suspension of the Energy Sector Shortfall and Debt Repayment Levy, known as the D-Levy, will allow the government to maintain a total GH¢2-per-liter intervention on diesel. Under the revised arrangement, GH¢1 will come from reduced statutory margins, down from GH¢2 previously, while the remaining GH¢1 will come from the temporary levy suspension, according to information gathered by Citi Business News.

The move comes as fuel prices are expected to rise sharply at the start of October, driven largely by higher international petroleum prices and a weaker Ghanaian cedi against the U.S. dollar.

The Chamber of Petroleum Consumers, or COPEC, forecasts a 22.91% increase in diesel prices and a 5.21% rise in petrol prices from Thursday, Oct. 1. It expects diesel to increase to GH¢22.42 a liter from GH¢18.24, while petrol is projected to rise to GH¢17.78 from GH¢16.90.

The expected increase in pump prices has already prompted an 8% increase in transport fares, according to COPEC.

By maintaining the GH¢2-per-liter intervention, the government is seeking to absorb part of the expected increase in diesel prices. The policy, however, changes the source of that support, replacing part of the reduction in statutory margins with a temporary suspension of the D-Levy.

COPEC Executive Secretary Duncan Amoah, in a statement Tuesday, attributed the projected fuel-price increases primarily to developments in international oil markets and a marginal depreciation of the cedi against the U.S. dollar.

The temporary suspension is scheduled to cover October and November, after which the government’s treatment of the D-Levy and diesel pricing support could be reassessed.

Source:TheDotNews