Ghana’s Bulk Oil Distributor predicts 2% drop in fuel prices

The Chamber of Bulk Oil Distributors (CBOD) in Ghana has revised the benchmark foreign exchange (FX) forward from 60 days to 30 days.

Ghana’s Bulk Oil Distributor predicts 2% drop in fuel prices
  • The Bulk Oil Distributor revised the benchmark foreign exchange for the second pricing window of August.
  • The revision is from 60 days forward rate to 30 days forward.
  • The move will translate into a two percent fall in fuel prices.

The move is expected to translate into a two per cent and three per cent fall in ex-pump prices of refined petroleum products.

The chamber made the revelation in a report it issued.

According to the report, the projected reductions could translate into between 10 pesewas per litre to 15 pesewas in price drop per litre for both gas oil and gasoline.

It explained that the revision was to help encourage industry players to revise their FX rates downwards and help reduce pump prices for consumers.

As a result, it said, “the forward FX rate 30 (FuFeX30) shall be the benchmark FX rate instead of the FuFeX60 for establishing the price indicators”.

The FuFeX used is the average of the quoted indicative forward forex rate from major oil financing banks adjusted by the covered-interest parity pricing model.

The CBOD, which is an advocacy group for bulk oil distributing companies (BDCs), tracks the movement of FX and its implication on ex-pump prices of refined petroleum products.

“The Fufex30 to be applied for the second selling window of August 16 to 31, 2019 is GH¢5.57,” the report said.

Background

The Chamber of Bulk Oil Distributor Companies (CBOD) recently urged the Bulk Oil Distribution Companies in Ghana (BDCs) to revise their trade credit tenor from the average 60-day to a 30-day forward rate.

The move was to help in the reduction of fuel prices by about 2% in the country.

The forward forex rate used is the average of the quoted indicative forward forex rates from major oil financing banks adjusted by the covered-interest parity pricing model.

The 60-day forward rate is computed as the average of selected major oil financing banks

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