NPA to defend Ex-Refinery Differentials – Alex Mould

From: Kofi Adu Domfeh/Luv Fm/Ghana

The National Petroleum Authority (NPA) has indicated its readiness to defend the legality of establishing and operating the Ex-Refinery Differential Escrow Account.

A recent ruling by the Accra High Court abolished the ex-refinery differentials on petroleum products and directed the NPA to pay an estimated accrued GH¢661 million surplus into the Consolidated Fund.

The NPA however filed for a stay of execution and will be in court on Wednesday to appeal for an overturn of the judgment.

Acting Chief Executive, Alex Mould told Luv FM praying the courts to review the ruling is in the interest of the public.

“One of the mandates of the NPA is to protect the consumer and that is the reason why we’re appealing because we believe that this will cause instability in the economy and also it will be unjust to certain social sectors, especially the fishermen, cocoa farmers and also to the users of LPG and kerosene, which are the more deprived people in the economy,” he observed.

The ex-refinery differential was introduced in the petroleum price build-up in the last quarter of 2006, when government’s interventions in the administration of the petroleum pricing policy caused problems to the petroleum service providers (PSP) including the Tema Oil Refinery (TOR).

This resulted in inadequate pricing and consequential under recovery of cost of procuring, processing, transporting, storing and marketing expenses.

The NPA, in consultation with the PSPs, therefore set aside the ex-refinery differentials for settling under-recoveries under the Escrow Account opened at the Ghana Commercial Bank and managed by TOR.

But in September 2009, Development Data and Kweku Kwarteng sued the NPA and TOR, praying the court to order the cessation of the collection of the “illegal” ex-refinery differential because it has been imposed as a tax without parliament’s approval.

The court ruled against the NPA, though the Authority explained in its defense that the ex-refinery differential was not a tax.

According to Alex Mould, managing the price volatility of petroleum products would be impossible if the stability pricing mechanism is taken out, stating that the ex-refinery differential account will be in deficit by over GH¢128million at the end of 2011, which represents additional subsidy granted on petroleum products.

“If the judge turns down the appeal, then immediately the NPA will not be able to manage price increases in the country. Also government will not be able to subsidize directly through the mechanism,” he warned.

The NPA CEO noted that if the ruling is carried through, prices of petroleum products at the pump will immediately go up based on current international market price of crude oil.

Mr. Mould however assured “we’ll take this to the highest courts and even go above the highest court for full interpretation of this and we believe we’re doing this in the interest of the people of Ghana, the citizens of Ghana, we the tax payers and we believe sanity will prevail on that day”.