NPA urged to build capacity to avoid unfair competition

FuelThe Africa Centre for Energy Policy (ACEP), has called on the National Petroleum Authority (NPA) to build its capacity to detect, monitor and ensure prosecution of companies involved in cartelisation and unfair competition

The Centre urged the Authority to create a public portal for publishing real-time prices of major Oil Marketing Companies (OMC) to give consumers the right choice over where to buy their products, stressing that this would help achieve the purpose of deregulation and bring relief to consumers.

Mr Ben Boakye, Deputy Executive Director of ACEP, made the call at a news conference in Accra on the current government policy on full deregulation of the downstream petroleum industry.

The Centre commended for deregulating the downstream petroleum sector because it is a positive step towards demystifying the downstream market, which could be beneficial to the consumer and reduce the impact of persistent shocks and anxiety introduced into the market when NPA announced hardly predictable prices of petroleum prices.

Mr Boakye said deregulation of the sector has been discussed for a long time, but public anxiety about a poorly managed deregulation, which gives rise to formation of cartels and price manipulation contributed to the delay in its full implementation.

He said even though there has been some reasonable competition among the Bulk Distribution Companies (BDCs), in importation and sale of petroleum products to OMCs, the reality is that the consumer does not feel the effect of the competition.

This is because NPA sets the price ceiling but the OMCs do not see reason to sell below the ceiling, while the OMCs are benefitting from the windfalls whenever they get favourable prices from BDCs.

Mr Boakye appealed to government to fast-track the amendment of NPA Act 691 to recognise full-price deregulation, adding that the existing law does not recognise the role of market operators in fixing prices especially the maximum indicative prices.

He said government should abolish the Tema Oil Recovery debt levy of eight pesewas per liter because Ghanaians have overpaid the debt, which has the tendencies of distorting the prices and increase the burden on consumers.

Dr Mohammed Amin Adam, Executive Director, ACEP said full deregulation does not negate government intervention when the need arises.

He said when prices escalate in the market, government must intervene by providing tax subsidy to cushion consumers.

Dr Adam called on government to scrap the policy on fortnight revisions of pump prices because it promotes cartelisation and reduces changes in petroleum product prices arising from volatility in the average bi-weekly exchange rate used in pricing of products.

He said ACEPs analysis of countries that have fully deregulated has shown that, with full deregulation, prices would initially go up but eventually become competitive and lower.

“It is for this reason that we call on the BDCs and the OMCs to take advantage of the current appreciation in the value of the cedi relative to the US dollar and other major currencies to review their prices down to build confidence of the consumer in the deregulation policy,” he added.

Source: GNA

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