ACEP: Scrap all recent increments on fuel margins by NPA

The National Petroleum Authority (NPA) this week reduced fuel margins by eight pesewas but ACEP says that was not enough

The African Centre for Energy Policy (ACEP) has called on the government to scrap all the recent increments on fuel margins imposed by the National Petroleum Authority (NPA).

According to ACEP, the justifications for the increments are weak and present an unnecessary burden on the consumer.

The think tank also wants the NPA and BOST to immediately publish the utilisation of the existing margins to show cause for adjustment.

In a statement, ACEP said, “Certainly, the government needs to find additional streams of income to address emerging development challenges. However, ACEP preferred that efforts to raise more revenue had focused on innovative ways to harness untapped potential rather than burden those already in the tax bracket and facing significant economic challenges partly imposed by COVID-19.”

The statement added, “The downstream petroleum sector is characterised by unending evasion and smuggling, which account for revenue losses to the state. In 2019, NPA’s records indicate that about 850 million litres of petroleum products were unaccounted for, yielding total revenue losses of about GHC1.458 billion. These are exclusive of pervasive illegal products on the market.”

ACEP said, though some efforts have been made to track the losses in the sector by the government, there is still a gap in the reconciliation of revenues and consumption data on petroleum products as the disparities in revenues and consumption of petroleum products for 2020 is estimated to be about GHC1.1 billion.

Despite this shortfall, ACEP said, an independent contractor, Strategic Mobilisation Ghana Ltd (SML), procured by the Ministry of Finance for revenue assurance and tracking of petroleum product volumes, has mounted a spirited media campaign claiming it has saved the government about GHC1 billion in revenue.

According to the think tank, this claim is neither supported by fiscal data from the Ministry of Finance nor the company’s data circulated to the media.

ACEP has therefore urged the government to go in for a robust system that accounts for tax evasion in official data and illegal petroleum products on the market, which is much pervasive.

The composite loss across the downstream is estimated to be over GHC3 billion, compared to an expected revenue increase of about GHC1.5 billion from the levies and margins, which may prove counterproductive given the current microeconomic condition of citizens dictated by escalating inflationary pressures since the beginning of the year.

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