Ghana’s refining capacity yet to shield fuel market from global shocks – CEMSE

Ghana's expanding refining capacity can improve fuel security, but it cannot completely protect the country from global petroleum market shocks, according to Benjamin Nsiah, Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE). At full capacity, local refineries could meet roughly 60% of domestic petroleum demand, leaving the nation dependent on imports for the remaining 40%.

Nsiah, who spoke to the Ghana News Agency in Accra, emphasized that Ghana currently consumes between 120,000 and 140,000 barrels of petroleum products daily, making investments in local refining infrastructure crucial for energy security. He pointed out that Ghana's petroleum pricing regime remains vulnerable to international market developments, as the country's pump prices are largely influenced by global refined petroleum prices, exchange rates, freight and insurance costs, and taxes.

Despite efforts to expand local refining capacity, fluctuations in global oil prices and foreign exchange rates could still affect domestic fuel prices. Nsiah noted that recent developments in both state-owned and private refineries present opportunities for increased domestic production. For instance, the Tema Oil Refinery (TOR) recently reported a profit after tax of GH¢1.24 billion following reforms aimed at strengthening its operations and contributing to national energy security.

Moreover, planned expansion projects by local refining companies could significantly boost domestic output, potentially enabling the country to meet its entire fuel requirement. If successful, these projects could put Ghana on a stronger path towards petroleum self-sufficiency and potentially allow the nation to export petroleum products in the West African sub-region.

Nsiah recommended gradually recalibrating Ghana's petroleum pricing framework as domestic refining capacity increases, taking into account local refinery costs and operational realities. He argued that a stronger domestic refining industry would provide an opportunity to reduce dependence on international pricing benchmarks, which significantly influence fuel prices, ultimately leading to a more resilient petroleum sector and reduced impact of external market disruptions on consumers and businesses.