Executive Director of the African Center for Energy Policy (ACEP), Ben Boakye, has expressed significant concerns regarding the National Petroleum Authority’s (NPA) new pricing guidelines for petroleum products.
The NPA recently informed industry stakeholders that, starting April 1, 2024, it would establish a pricing “floor” to prevent any entity, including Oil Marketing Companies (OMCs) and Liquefied Petroleum Gas Marketing Firms (LPGMF), from pricing products below this benchmark.
The NPA cited this as part of the Amended Pricing Guidelines. In response, Mr. Boakye emphasized that “it is strange that the regulator has taken decisions that are contradictory in what has become a deregulated market”.
“What we want the regulator to do after almost 8 years of partial de-regulation, was for them to move to full de-regulation where the market determines what happens”, Mr. Boakye argued.
He pointed out that the NPA should be acting in a way that signals a commitment to achieving complete deregulation.
Background
The NPA has stated that the move is part of efforts to deal with concerns from industry players about serious price undercutting by some oil marketing companies.
The Amendment to Petroleum Products Pricing Guidelines follows the establishment of the committee by the NPA to review the Pricing De-Regulation Policy which took off in June 2015.
This was based on complaints from the industry players that after years of implementing the policy, the time has come to carry out the necessary review to make it better to serve the industry.
It was based on the recommendations of the committee and feedback from industry that the NPA is coming out with the guidelines, as captured in a letter dated March, 27 2024 to the Oil Marketing Companies, Bulk Oil Distribution Companies and other players in the industry.
ACEP’s response
Mr. Boakye noted that “what we want the NPA to do is to track the abuse of the customer product quality that comes to the market”.
“It appears the NPA is moving away from its core mandate, and rather getting into business where the consumer is billed”, Mr. Boakye added.
He challenged the NPA to come out with better explanations for its actions
“I don’t know the intends and purpose of doing this as a regulator and why they want to get into price floor for petroleum products”
“If the player has imported a product and that player says they can sell at 2 cedis and be in business and pay all their taxes, why should the NPA come and say that you cannot sell at that price”, he questioned.
Mr. Boakye further commented that the actions taken by the NPA contradict the essence of the Partial Deregulation policy initiated in June 2005.
“The purpose was to allow the forces of demand and supply to determine prices at the pumps”.