Save 20% off! Get our Magazines and get 20% off right away!

NPA addresses ACEP’s concerns over price floor for petroleum products

The National Petroleum Authority (NPA) has addressed the Africa Centre for Energy Policy’s (ACEP) concerns regarding its proposal to introduce a price floor for petroleum products on April 16, 2024.

The NPA earlier announced its decision as part of the New Pricing Guidelines for Oil Marketing Companies and Other Industry Players.

ACEP argued, among other reasons, that this move is unlawful since it exceeds the scope of the NPA’s mission.

However, in a subsequent press release, NPA stressed that the price floor would not have an impact on competition between OMCs and others in the energy sector, nor would it impose high consumer costs, as ACEP and other stakeholders fear.

“NPA is mandated by its Act to protect the interest of consumers and Petroleum Service Providers (PSPs) alike and uses its policies and regulations to achieve this mandate. A multi-stakeholder committee was established in 2021 with representation from all key stakeholders in the industry to assess the price deregulation policy which has been in operation since July 2015.”

“One of the major concerns that emerged from the committee’s work was the inability of PSPs to sometimes fully recover their costs due to unhealthy price competition that sometimes occurs amongst them. The proposed solution to the above concerns is to set “price floors for BIDECs and OMCS/LPGMCS which take into consideration only the fixed costs, taxes, levies, statutory and distribution margins in the Prescribed Petroleum Pricing Formula. These are costs that apply to all PSPs,” parts of the statement read.

The NPA stated that because it is mindful of the price deregulation strategy and how it encourages competition among companies in the petroleum downstream industry, the price floors will exclude PSPs profits.

The Authority stated that PSPs may determine their margins, as they do now and as required under the pricing deregulation programme.

Source: Energy Ghana