ACCRA, Dec 29 (Reuters) - Ghana has cut fuel subsidies following an increase in crude oil prices and the depreciation of the Ghana cedi currency, the head of Ghana’s National Petroleum Authority (NPA) said in a statement on Thursday.
Ghana, which joined the club of oil producers in West Africa last year, has come under increased pressure from the International Monetary Fund to remove the fuel subsidies.
The IMF has urged countries across West and Central Africa to cut fuel subsidies, which they say are not effective in directly aiding the poor, but do promote corruption and smuggling.
The past months have seen governments in Nigeria, Guinea, Cameroon and Chad moving to cut state subsidies on fuel.
Alex Mould said the cumulative effect of the rise in crude oil prices this year and the about 5.7 percent depreciation of the cedi meant a 25 percent increase in cedi terms in the cost of procuring crude oil and petroleum products since January.
Mould, the Chief Executive Officer of the NPA, said Ghana has spent about 450 million cedis ($276 million) on fuel subsidies in 2011.
The price change effective from Dec. 29, will see the cost of Liquefied Petroleum Gas (LPG) increase by 30 percent while petrol and diesel will go up 15 percent at pump.
Mould said the NPA would be monitoring crude oil prices and will not to increase or decrease pump prices if the average crude price stay within the $107-110 per barrel range.
Brent crude rose 4 cents to $107.60 a barrel by 0933 GMT on Thursday after falling nearly $2 the day before, while the Ghana cedi was trading at 1.6370/95 to the U.S. dollar.
Ghana’s Minister for Finance Kwabena Duffour said the removal of subsidies would have a positive impact on Ghana’s economy.
“Subsidising fuel is not sustainable,” Duffour told Reuters. “It is the right thing to do so we can sustain our fiscal consolidation.” (Reporting by Clair MacDougall; Writing by Bate Felix, editing by William Hardy)