A rather snazzy car in James Town, Accra; the owner no doubt is thrilled by the price of petrol in Ghana
Ghana's economy has taken a bit of a battering over the last few years, but I still wasn't prepared me for the shock that the government unleashed on the population this morning. Today the price of a gallon of petrol has increased from 10,500 cedis to a whopping 20,000 cedis, just like that. That's an increase of over 90 per cent overnight.
The main reason for the increase is depressingly simple. The state-run Tema Oil Refinery, Ghana's main refinery, is in debt to the tune of 4.5 trillion cedis (that's 4,500,000,000,000 cedis, or around £330 million) and the debt is getting bigger all the time. Official explanations of this huge debt are vague, to say the least, but the words 'corruption' and 'inefficiency' crop up throughout Ghana's top-selling daily newspaper, the Daily Graphic, and at least one important official has been sacked as a result.
Other factors behind the price hike include the rising price of crude oil due to the Iraqi crisis and the strikes in Venezuela, and the large fall in the value of the cedi against the dollar, which is used to set the global price for oil. However, one thing's for sure: doubling the price of petrol, diesel, kerosene and other petroleum products is guaranteed to increase the cost of pretty much everything else, from obvious things like transport to less obvious things like food. On top of this there were long queues at the petrol stations before the price hikes, not just because the government had intimated it would have to increase prices, but because some unscrupulous petrol stations pretended that they'd run dry, while secretly hoarding the cheaper petrol until they could sell it at the higher price after the rise. With the public desperate to fill their tanks before the change, it all added up to a nightmare at the pumps before the price moved an inch.
I don't know enough about Ghanaian politics to know whether price hikes like this are common, but electricity prices were increased by 60 per cent last year, after low rainfall reduced output from the Lake Volta hydroelectric plant at Akosombo. I hope this isn't an indication that Ghana is starting to fall apart; if it is, it's a demonstration that, unfair though it is, war, weather and world economic downturns affect developing countries the most.
