Ghana will purchase contracts to guard it from larger oil-product costs within the third quarter because the West African nation seeks to curb volatility in what customers pay on the pump amid rising prices of the gas in worldwide markets.
The authorities is placing collectively a risk-management program to go to the market “in a month or two” for choices on crude, with the strike worth but to be decided, Deputy Finance Minister Charles Adu Boahen mentioned by telephone on Friday. It plans to purchase crude at decrease costs after which promote it once they rise, utilizing the stability to subsidize imports of refined gas, he mentioned.
Ghana turned an oil producer in 2010, when Tullow Plc began Jubilee area, however it nonetheless must import refined merchandise. While larger costs will bolster the nation’s income, they stand to distort macroeconomic targets corresponding to inflation, Finance Minister Ken Ofori-Atta mentioned in February. Crude exceeded $70/bbl in the beginning of final month for the primary time since November 2014. It traded at $65.07/bbl at 1:40 p.m. within the capital, Accra.
The inflation charge dropped to 9.6% in April, getting into the central financial institution’s goal band for the primary time since 2013. Ghana is limiting spending by a bailout plan agreed with the International Monetary Fund in April 2015 to assist to attain inflation targets.
“Any time crude oil costs rise, the influence is felt six occasions extra on the importation facet than on the exportation facet,” Boahen mentioned. “After we hedge if crude costs go previous the strike worth you wouldn’t really feel the impact on the pumps as a result of it might have been capped.”
Bulk oil-distribution firms that import completed merchandise and promote to oil-marketing firms provide most of Ghana’s gas wants. The nation consumed three.5 million metric tons of petroleum merchandise in 2017, in keeping with knowledge from the National Petroleum Authority.
The nation will use cash kind the Ghana Stabilization Fund to finance the hedge whereas positive factors from the hedge may even filter again to it, Boahen mentioned.
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