GHANA: Muted protests to government hike in oil prices

[XXPANTHAXX]

ACCRA, 4 Mar 2005 (IRIN) - The Ghanaian government's move to
cut back on oil subsidies by raising consumer fuel prices 50
percent has got residents grumbling but there is no sign of
the crippling strikes that the Nigerian government was
confronted with when it tried similar tactics.

As of 18 February, a gallon of premium petrol in Ghana costs
30,000 cedis (US$3.33) compared to 20,000 cedis (US$2.22)
previously and similar price hikes have come into effect for
kerosene, diesel and other fuels.

The Energy Ministry has taken out newspaper advertisements
with charts showing that Ghana's fuel prices are the lowest
in West Africa after Nigeria and officials say price
increases are necessary to scale down government subsidies
and pump the cash into the health and education sectors
instead.

The National Petroleum Tender Board says that if the
government axed its subsidies entirely and left pricing to be
determined by the market, Ghanaians should really be paying
40,000 cedis (US$4.44) a gallon.

But these arguments cut little ice with ordinary people in
Ghana, where those on the minimum daily wage must work at
least three days to be able to afford a gallon of petrol.

Residents in the capital Accra are already feeling the pinch
after just two weeks of the price hikes.

"Things are difficult. Since the fuel prices went up, people
say they cannot even afford the 30,000-40,000 cedi price
range of my shoes," said 37-year-old George Graham, who sells
second-hand shoes. "If it gets worse, I will move to Togo or
Cote d'Ivoire despite the problems there."

Times have also got tougher for 28-year-old taxi driver
William Okyere.

"I now buy petrol when I need it instead of filling my tank
before I start work," he told IRIN. "I am now putting in more
hours than the 10 hours a day I used to work, just to meet my
operating costs."

Inflation also on the up?

Economists point out, that like many countries, fuel prices
have a big effect on the cost of living in Ghana and they say
they expect inflation to rise in March.

Official transport fares in Accra have already soared 30
percent in line with the dearer fuel, but some private taxi
drivers and bus operators have hiked their prices even more,
and residents report scuffles with passengers who refuse to
pay more than the published tariffs.

Earlier this week, the opposition organised a march through
the capital to protest the fuel price increases. But the show
of people power was in the hundreds not thousands and was a
far cry from the protest strike called by Nigeria's
opposition last October which paralysed several of the
country's big cities.

Nigerian President Olusegun Obasanjo began to phase out fuel
subsidies as part of his policy of deregulating Nigeria’s
downstream oil sector, insisting the reforms are necessary to
eliminate domestic fuel subsidies of over US$2 billion a year.

But during his five years in office, the opposition trade
union, the Nigeria Labour Congress has called six general
strikes in response to fuel price hikes. In November, a
threat to strike again brought about an eleventh hour offer
from the government to cut prices by 10 percent.

In Ghana, however, reaction is more muted, although the main
opposition party, the National Democratic Congress (NDC), has
threatened to take further action if the government does not
back down.

"We have given the government up to 7 March to review the
price hike otherwise we will continue with the street
protests as well as other alternatives," Harruna Iddrissu, a
NDC member of parliament, told IRIN.

Gradual approach?

The opposition concedes that price rises are necessary but
favours a more softly-softly strategy.

"We would have adopted a more gradual and sensitive approach,
especially taking into consideration that any increase in
petroleum pricing adversely affects every sector of the
economy," Iddrissu said. " We would not have pushed the
increases beyond 25,000 cedis (US$2.77)."

Ghana's government has proceeded cautiously this time around,
compared to 2003 when it hiked fuel prices by 92 percent,
which sent inflation soaring.

"I believe that was what persuaded the government to limit
the increases to 50 percent since it clearly will not want
the aftermath to impact negatively... and undermine the
economy," said Daniel Ogbamey Tetteh, a senior analyst at
Databank Financial Services in Ghana.

"While the price increases are inevitable, we think the
severity of the price hike would have been lessened if it was
done progressively last year. But we know this could not be
effected for political reasons, last year's elections,"
Tetteh said.

Ghana’s President John Kufuor won a second four-year term in
office in December elections.

During his first term, strong world prices for cocoa and
gold, two of Ghana's main exports, helped push economic
growth up to over five percent a year but many people in this
county of 19 million remain desperately poor. Nearly 45
percent live below the official UN poverty line of less than
a dollar a day, and average per capita income is just US$ 304
a year.

Presenting the 2005 budget last week, Finance Minister Kwadwo
Baah-Wiredu said the government expected to put about 229
billion cedis (US$25.4 million) back into people's pockets as
disposable income to soften the impact of the fuel price
hikes.

He noted that the daily minimum wage would go up to 13,500
cedis (US$1.50) from 11,200 cedis (US$1.24 ) and there would
be a reduction in income tax for some groups. In addition,
school fees at government-run schools would no longer have to
be paid by parents and more low-cost houses would be
constructed.