Ghana should deepen energy ties with Nigeria to tackle soaring fuel costs, economist urges

Ghana must pivot towards closer energy cooperation with Nigeria to secure more affordable crude oil supplies and provide lasting relief from fuel price shocks, according to prominent economist Professor Williams Peprah. His call comes as Ghanaians grapple with mounting pump prices, with petrol currently trading at GH₵14.50 per litre and diesel approaching GH₵18—pressuring household budgets and business operations nationwide.

Rather than relying on short-term government interventions or fuel subsidies, Prof. Peprah argues that strategic regional partnerships offer a more sustainable pathway to reducing Ghana's energy import burden. He emphasises that the current global energy landscape—marked by geopolitical tensions and disrupted shipping routes—has artificially inflated the cost of transporting crude to West Africa, directly translating into higher prices at Ghana's pumps.

Geopolitical headwinds driving up transport costs

International shipping disruptions, particularly those affecting the Strait of Hormuz and forcing tankers to take longer Red Sea routes, have significantly increased logistics expenses for African oil importers. Prof. Peprah notes that even major regional players like Nigeria's Dangote refinery have publicly acknowledged these transport cost challenges, suggesting the problem is systemic across the continent rather than Ghana-specific.

He points out that a temporary reduction of one cedi in fuel prices would provide minimal consumer relief without addressing root causes. Instead, he recommends that West African governments collaborate on energy infrastructure and supply agreements that could unlock cheaper crude access for countries like Ghana. Nigeria, as Africa's largest oil producer, could play a pivotal role in such an arrangement if both nations commit to deepening ties.

Why it matters for Ghana

Ghana's energy costs directly affect inflation, transportation expenses, and manufacturing competitiveness. High fuel prices cascade through the economy—pushing up fares for tro-tros and commercial transport, increasing production costs for industries, and eroding consumer purchasing power. For a developing economy already facing fiscal pressures, dependence on volatile global oil markets without regional alternatives leaves Ghana vulnerable to external shocks beyond government control.

The economist also highlights the potential of the Tema Oil Refinery (TOR) to serve as a game-changer if revitalised with adequate investment and steady crude supplies. A functional domestic refinery would reduce reliance on imported finished products, provide jobs, and create a buffer against global price spikes. However, such a turnaround requires consistent policy support and financial commitment from government.

A multi-pronged approach

Prof. Peprah's recommendations suggest Ghana needs a three-part strategy: first, bilateral energy negotiations with Nigeria to access cheaper crude; second, rehabilitation and operationalisation of TOR as a domestic refining asset; and third, regional coordination among West African oil importers to collectively negotiate better terms with suppliers and address shared logistics challenges. While he acknowledges that global factors like potential easing of Iran-related conflicts could eventually normalise prices, he argues Ghana cannot wait passively for external conditions to improve.

The question now is whether Ghana's government will pursue such partnerships with urgency. Without action, Ghanaians will continue absorbing the full brunt of global energy volatility.