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EDITIONS
 Monday, 20 January, 2003, 15:13 GMT
Ghana ends fuel subsidies
Ghana petrol
Petrol now costs about $2.40 a gallon in Ghana
Petrol prices in Ghana have almost doubled overnight after the government decided to end fuel subsidies.

We've taken the bold decision to stop the rot

Albert Kan Dapaah
Ghana energy minister
The government said prices should come into line with international market forces since it could no longer afford to bail out the indebted state refinery.

And Ghana's oil minister, Albert Kan Dapaah, admitted to BBC News Online that the government had left it too late to sort out the financial mess at the country's only refinery at Tema.

High crude oil prices and technical inefficiencies has meant the refinery has run up massive debts of 4.5 trillion cedis ($527m; 328m).

"We've left it a bit too long, but now we've taken the bold decision to stop the rot," Mr Kan Dapaah said.

The debt is now so large that, even by doubling petrol prices, there is only enough money to pay the interest and not reduce the underlying debt, he admitted.

Sweeteners

Many commuters expressed anger at the sudden price rises, which came with little warning.

And the oppostion party immediately criticised the decision, saying the increases should be resisted since it would worsen the economic plight of Ghanaians.

Energy minister Albert Kan Dapaah
Kan Dapaah: Ghana is increasing oil exploration efforts

In order to try to soften the blow to commuters, Mr Kan Dappah said the government would improve public transport.

The plans include taking delivery of 200 buses from Italy, 250 from Holland and another 100 from China.

A decision to raise the minimum wage by 20% is also being reviewed, with a decision expected at the end of this week.

And the government will forego pay rises and sacrifice their fuel allowances in order to help carry the "national burden".

Finance Minister Yaw Osafo-Maafo told the BBC's World Business Report that the total debt the refinery has is more than the total equity of all the banks put together in Ghana.

Tema sell-off

Ghana's dependence on imported oil from Nigeria means it is particularly vulnerable to rises in the price of oil in world markets.

Crude oil prices have risen above $30 a barrel in recent weeks because of a strike in Venezuela and fears over a war with Iraq.

The oil minister said Ghana was making greater efforts to explore for its own oil, to try to reduce its vulnerability to such price swings.

The government is also considering selling a stake in the Tema refinery in order to chip away at the debt mountain.

But Mr Kan Dapaah said that the only way to get the refinery back on track was to hope for lower oil prices.

  WATCH/LISTEN
  ON THIS STORY
  Ghana finance minister, Yaw Osafo-Maafo
"The total debt the refinery has is more than the total equity of all the banks put together in Ghana."
See also:

06 Jan 03 | Business
24 Sep 02 | Business
17 Jan 03 | Business
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