The country’s oil and gas imports went down by 43.4 per cent to $2.05 billion last year on the back of a 60 per cent decline in prices of the commodity and a general slowdown on economic growth within the period.
In 2014, oil and gas imports cost the country $3.69 billion but declined to $2.05 billion last year as global oil prices tumbled from $110 per barrel in 2014 to $35 per barrel in December last year.
The decline, which was captured in data released by the Bank of Ghana (BoG), is the first of that magnitude in years. It even came on the back of some four per cent growth in oil and gas imports between 2013 and 2014.
Volumes of oil and gas imports rose from 11.57 million metric British thermal units (MMBTu) in 2013 to 22.54 MMBTu in 2014, partly resulting in the four per cent growth in the value within the period.
As of September last year, oil and gas imports were reported at 6.92 MMBTu by the BoG, compared to 5.39 MMBTu the same period in 2014.
Causes of decline
The decline in oil imports confirms earlier suggestions that the drastic reduction in crude oil prices would only dampen growth in the upstream petroleum sector but shine some light of hope on a burgeoning crude import bill.
While admitting that the decline was as a result of the sharp fall in prices of crude oil in 2015, an Economist and Lecturer at the University of Cape Coast (UCC), Dr John Gatsi said it also reflected the difficulties the local economy went through in 2015.
“When economic difficulties set in and business growth reduces, you will obviously expect that demand for certain goods will decline and oil imports will not be different,” he said.
After peaking at 14 per cent in 2011, growth of the economy has narrowed to four per cent in 2014 and is now estimated to end 2015 at 4.1 per cent.
The economist explained that the slowdown in growth meant demand for intermediary goods, including crude oil and gas by businesses, also went down within the period.
He, however, explained that the decline had little impact on the economy mainly as a result of the strong growth in the non-import bill.
Impact on trade deficit
The decline in the value of oil imports helped to reduce the strong growth in the country’s import bill.
In 2014, the national import bill was $14.6 billion but came down by 7.8 per cent to $13.44 billion in 2015.
It, however, failed to suppress the trade deficit due to a strong growth in non-oil imports within the period.