Ghana's 60% petrol price hike

Ghana's sole refinery can process 45,000 barrels a day

Ghanaians woke up after the weekend to discover that petrol prices had risen by more than 60% in one fell swoop.

The hike has serious economic implications for the West African state because Ghana derives 70% of all its energy needs from crude oil or oil products.

This is a much higher percentage than in industrialised cultures where have gas and electricity are more prominent.

Many local industries in the west African country will simply be unable to absorb the rising fuel costs and stand idle.

And as well as dramatically higher petrol prices, an average Ghanaian also faces much bigger bills for cooking and heating.

Complete dependence

Ghana has no oil or gas production of its own, and is 100% dependent on importing fuel.

Ghana's petrol prices have soared 60%

It has one refinery, at the main port of Tema near the capital city of Accra, which processes around 45,000 barrels a day of crude oil, most of which is bought from neighbouring Nigeria.

Nigeria is a member of Opec - the cartel that exists to cut back oil production and ensure that oil prices remain high enough.

It is the efficiency of this cartel over the last 18 months that has seen global crude oil prices rise to over $35 a barrel last October, compared to a low of under $10 a barrel the previous year.

And this leaves importing countries such as Ghana the stark choice of paying the vastly increased prices or not supplying its industries with any fuel at all.

Subsidies removed

Until recently the state-owned oil company subsidised fuel costs, freezing the cost to the consumer, because of the presidential election last year.

This subsidy was costing the state six billion cedis a day ($845,000) and contributed to the ballooning domestic debt of seven trillion cedis.

A gallon of petrol will now be sold at 10,500 cedis ($1.50) rather than last week's 6,400 cedis, while the cost of diesel and kerosene, rises to 8,800 cedis from 6,000 cedis.

The removal of subsidies is driven by Ghana's rigorous privatisation programme, as well as out of financial necessity.

The European Union last year issued warnings to Opec about the damaging effects of high oil prices on developing countries.

Opec took heed and adopted a more lenient stance.

But the price of crude oil is still 'high', now standing at about $26 a barrel.