The National Petroleum Authority (NPA) has introduced new minimum prices for petroleum products that will be in effect from May 1 to May 15, 2024.
According to a circular issued to Oil Marketing Companies (OMCs) and Bulk Oil Distribution Companies, the minimum price for a liter of petrol is set at GH¢13.63.
This is slightly higher than the previous price floor of GH¢13.02, which the NPA announced on April 16, 2024.
The price floor for diesel remains unchanged at GH¢13.07 per liter.
Additionally, the NPA mandated that the minimum price for a kilogram of Liquefied Petroleum Gas (LPG) should not be less than GH¢10.55 pesewas.
This adjustment marks a rise from the previous rate of GH¢10.52 noted on April 16, 2024.
The circular serves as a reminder to all industry participants, including Oil Marketing Companies (OMCs), to adhere strictly to the updated pricing regulations.
These pricing guidelines pertain to the second pricing period for petroleum products, running from April 16 to April 30, 2024.
Industry analysts speculate that this new pricing floor for the period would take effect on petrol prices from May 1 to May 15, 2024.
NPA’s New Pricing Rule
The National Petroleum Authority (NPA) clarified that the introduction of a price floor is necessary to prevent undercutting within the industry.
According to the NPA, certain corrupt practices, if left unchecked, could jeopardize the stability of the petroleum industry. However, this initiative has faced criticism from industry stakeholders who view the policy as anti-free market.
In response, the NPA defended its decision, emphasizing that the policy is crucial to curbing undercutting practices. The NPA stated that the price floor aligns with the Amended Pricing Guidelines implemented on April 1, 2024.
According to the Amendment to the Pricing Guidelines, the NPA “shall set and communicate price floors for the deregulated products for each pricing window.”
In a letter addressed to industry participants and signed by Deputy Chief Executive of the NPA, Curtis Perry Okudzeto, all Petroleum Service Providers have been urged to adhere strictly to the guidelines.
The NPA assured Petroleum Service Providers that they would receive regular updates, including the complete pricing formula detailing specific taxes, levies, and margins applicable for each pricing window, provided in an Excel format.
The Petroleum Service Providers, according to the NPA “shall comply with the price floors set for the deregulated petroleum products for each window by not selling products below those prices.”
Industry Concerns
One month after the implementation of this policy, certain industry stakeholders remain apprehensive about its impact. The Chamber of Bulk Oil Importers, for instance, has expressed reservations regarding the Forex Rate utilized in determining the price floor.
They advocate for the use of Bloomberg Rates instead of the Bank of Ghana rates for the forex component when setting prices, emphasizing their concerns to the NPA.
Also, the Executive Secretary of the Chamber of Petroleum Consumers (COPEC) Duncan Amoah argued that “If the NPA is setting a price floor for the industry, then they should also set a price ceiling as well.”
Furthermore, Ben Boakye, the Executive Director of the African Centre for Energy Policy, argued that the market is not adequately prepared for the policy, citing ongoing challenges within the sector as a significant factor.
The NPA’s new pricing rules aim to stabilize the petroleum industry by preventing undercutting. Despite criticism, the NPA emphasizes the necessity of this policy to combat corrupt practices.
Stakeholders’ concerns reflect ongoing challenges within the sector, suggesting a need for careful implementation and ongoing dialogue.
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