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Projected fuel price reduction may be impossible due to cedi depreciation – Research and policy analyst

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Despite the global downturn in petroleum prices, Ghanaian fuel consumers are unlikely to benefit from anticipated decreases at the pump.

The rapid depreciation of the cedi is poised to offset any potential price reductions during the second petroleum pricing window for May, which began on Thursday, May 16.

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Analysts expect a slight decrease in prices, but projections indicate that the devaluation of the cedi will counterbalance this decline.

While international market trends show significant drops in refined petroleum product prices, with petrol and diesel experiencing declines of 5.68% and 4.51% respectively, according to the Institute of Energy Security, Ghanaian consumers may not experience substantial relief.

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The recent depreciation of the cedi, losing 8-10% of its value in the past two weeks, is anticipated to nullify these declines, resulting in minimal savings for consumers at best.

Derrick Xaste, a research and policy analyst at IES, emphasized that competitive pricing strategies employed by oil marketing companies (OMCs) may only lead to a marginal reduction in prices, approximately 2%.

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“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.”

In the meantime, Duncan Amoah, the Executive Director of the Chamber of Petroleum Consumers, has cautioned that prices could either stay steady or rise further if the cedi’s depreciation persists.

At the onset of the pricing window, key Oil Marketing Companies (OMCs) such as Goil and Total Energies had kept their prices unchanged, with petrol and diesel retailing at GH¢14.40 and GH¢14.65, respectively.

Consumers are advised to brace themselves for potential price hikes should the cedi’s devaluation persist, underscoring the intricate dynamics involving global market shifts, currency fluctuations, and local pricing strategies.

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