The politics of petroleum pricing in Ghana: Institutions, power dynamics, and social networks

• Date: 01 May 2020
• Author: Franklin Akosa,Ahmad Paiman
• Published date: 01 May 2020
• DOI: http://doi.org/10.1002/pa.2028

ACADEMIC PAPER

The politics of petroleum pricing in Ghana: Institutions, power

dynamics, and social networks

Franklin Akosa

1

| Ahmad Paiman

2,3

1

Department of Political Science, Mountcrest

University College, Accra, Ghana

2

Law and Administration Departments,

University of Raparin, Ranya, Iraq

3

International Relations & Diplomacy, Faculty

of Administrative Sciences and Economics,

Tishk International University, Erbil, Iraq

Correspondence

Franklin Akosa, Department of Political

Science, Mountcrest University College,

Readwide Building, 12 Ablade Road, Kanda

Estate, Accra, Ghana.

Email: franklinakosa@gmail.com

The study, drawing on the political settlement approach, examines how powers, insti-

tutions, networks, and interests influence the pricing of petroleum products in Ghana.

Qualitative research approach was for the study, and purposive sampling was used to

interview 24 respondents. The findings suggest the existence of power struggles

among the key actors in the pricing of fuel. The findings revealed that the National

Petroleum Authority, bulk distribution oil companies, oil marketing companies, Inter-

national Monetary Fund, and energy policy think tanks influence result into policy.

Actors influence fuel prices through taxes, policy guidelines, exchange rate, and legal

actions. The study recommends that capacity of the key players should be built by

the Government of Ghana so as to ensure healthy competition and stability in the

pricing of petroleum products in Ghana. Political interference in the pricing of fuel

should be limited so that the key players can operate successfully in the petroleum

downstream.

1|INTRODUCTION

Petroleum politics has been of growing global interest in recent times.

Open many textbooks and research articles on energy politics, and the

phrase “fuel pricing”would show up (Gurney, 1996; Titeca & Edmond,

2019). Governments, researchers, and development practitioners in

Ghana and other parts of the world (Obeng-Odoom, 2015; Trabelsi,

2017) have shown keen interests in the issues surrounding petroleum

product governance and its pricing. The Finance Minister, Ken Ofori

Atta, in presenting the 2019 Ghana budget statement in accordance

with Article 179 of the 1992 Constitution of the Republic of Ghana

on November 15, 2018, indicated that, as of August 2018, the total

petroleum receipt was US$604.09 million (GH₵2.72 billion) and the

Benchmark crude oil price for 2019 has been projected at US$66.76

per barrel in line with the Petroleum Revenue Management Act

(Amendment), 2015 (PRMA, Act 893), in the year 2019 (MoF, 2018).

The great concerns shown by state actors as in the case of Ghana

position the pricing of fuel and its governance strategically in the Gha-

naian economy.

Heinrich and Pleines (2015) have argued that political elites in

countries like Ghana and other developing countries clearly perceive

themselves as key actors who determine the fate of the prices of

petroleum product s. This is shown when the prices of petroleum

products increase on th e international marke t. The government is

hesitant to increase the price s of fuel. However, w hen there is

reduction in the prices of fuel on the international markets, the gov-

ernment speeds to announce the reduction so as to achieve political

points (Jaffe, Newell, & Stavins, 2005). Gary (2009) has linked these

to extreme presidential power, incomplete independence of the

body that regulates the pricing of petroleum products, unclear

authority, and overlapping functions of the agencies handling issues

on petroleum pricing , limited role for pa rliament on issues co n-

cerning energy, lack of transparency, and absence of oute r limit for

commencement. Becau se of these obstructi ons, the powers and

interests of the actors involved in the pricing of fuel are not clearly

seen and understood. Boahen (2015) has also indicated that govern-

ments have played poli tical games with the pr icing of fuel. Through

campaign promises an d political manif estoes, numerous go vern-

ments have interfer ed with the pricing of f uel. Political act ors have

made contentious deci sions in the face of confli cting market funda-

mentals (Gingrich, 2011).

There are numerous literature on political economy and petroleum

pricing, classic (Gurney, 1996; Khan, 1994) and contemporary (Li, Qiao

& Zhao; Titeca & Edmond, 2019). Much of these literature focus on

the policies in implementing the prices of fuel, mostly in the devel-

oped and developing countries (Rowland & Mjelde, 2016).

Received: 5 February 2019 Revised: 29 May 2019 Accepted: 3 September 2019

DOI: 10.1002/pa.2028

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https://doi.org/10.1002/pa.2028