Businesses and households that rely on fuel endured massive hike in fuel prices for the last four years straining their operations and cost of living.
The latest report by the Ghana Chamber of Bulk Oil Distributors (CBOD) on the trend of fuel prices in the last four years – 2020 to 2024 – reveals an astronomical rise. This suggests how businesses such as those in the transportation and other industries have bore the heat throughout the period.
According to the report, petrol that sold for GH¢5 per litre at the beginning of 2020 sold at GH¢ 13 per litre at the end of 2024. This astronomical surge represents a 150% increase.
Diesel which also started in 2020 at an average price of GH¢5 per litre is now selling around GH¢ 15 per litre. CBOD’s report indicates that this is about a 200% increase.
Source: CBOD,2025
The Cause
CBOD says a number of factors occasioned this business-unfriendly hike in fuel prices with the chief being the unstable exchange rate of the country.
In 2024 alone, the cedi depreciated by an alarming 40.88%, further pushing fuel prices upwards. The Bank of Ghana (BoG) introduced a special foreign exchange auction in 2022 to provide forex to Bulk Import, Distribution, and Export Companies (BIDECs) at lower rates, aiming to cushion the impact of currency depreciation on fuel prices. Despite this intervention, the BoG’s current monthly FX allocation of $40 million to BIDECs still fell short of the estimated $400 million required monthly for petroleum imports.
“The exchange rate has been the most significant contributor to the rising pump prices in Ghana. The Ghanaian cedi depreciated by a staggering 40.88% against the US dollar in 2024 alone. This sharp depreciation directly impacted the cost of petroleum products, which are imported in US dollars,” portions of the report cited by The High Street Journal read.
The Chamber also admits that global happenings such as the Russia-Ukraine War, the COVID-19 pandemic, and the Israel-Iran War cannot be exonerated from the soaring prices at Ghana’s pumps.
These disruptive global events, according to the CBOD negatively affected the global supply chain leading to shortages hence the increase in prices. In addition, sanctions imposed on Russia, a significant producer of the world’s fuel also led to shortages which drove prices up.
“Russia, a major oil and gas producer, faced sanctions that disrupted supply chains and led to increased prices on the international market,” the report stated adding that “the COVID-19 pandemic disrupted global supply chains, leading to significant increases in transportation and production costs.”
Implications on Individuals, Businesses & Economy
The economic impact was seen in the persistent hike in transportation costs which trickled down to the prices of goods and services on the market. Commercial transport operators over the period had no choice but to increase transport fares on multiple occasions which ranged between 15% to 30%.
A significant portion of the country’s inflation recorded during the period, some analysts conclude emanated from fuel price hikes.
CBOD further reports that this also affected the country’s energy transition agenda as consumption of Liquefied Petroleum Gas (LPG) declined due to price hikes. For instance, from about 345,478 MT in 2021, the consumption of LPG by households dropped to 305,076 MT in 2022, mainly due to a hike in price at the gas stations.
Lessons for the New Government
The average 150% increase in fuel cost is a testament to how individuals, businesses and the transport sector have suffered in the last four years. This put a greater responsibility on the new government tasked with the country’s economic governance for the next four years.
The new dawn for the country’s economic governance offers an opportunity to stabilize the country’s exchange rate. In addition, it is also an opportunity to build a resilient economy that can withstand global shocks. It is also an opportunity to accelerate the diversification of the country’s energy mix to mitigate the over-dependence on petroleum products.
CBOD says the Ghanaian government and stakeholders must work to address these challenges and prioritise exchange rate stability which remains essential.
“Long-term strategies, such as diversifying energy sources and improving local refining capacity, could help mitigate the impact of global and domestic factors on pump prices,” the chamber added.
Addressing these challenges with a forward-thinking approach will not only provide relief to businesses and consumers but also position Ghana for long-term energy security and economic resilience in the face of global uncertainties.
Source: thehighstreetjournal.com
