The National Petroleum Authority (NPA) has reaffirmed that Oil Marketing Companies (OMCs) operating in Ghana have the liberty to reduce fuel prices at any time, emphasizing that the downstream petroleum sector remains fully competitive.
Abass Ibrahim Tasunti, Director of Economic Regulation and Planning at the NPA, clarified that the current pricing framework empowers companies to adjust prices within the pricing window whenever market conditions become favourable.
Speaking on the evolution of Ghana’s petroleum pricing regime, Tasunti explained that the transition from regulated pricing began in 2015, when OMCs were granted independence to determine their own prices. This shift was formalised through an amendment to Legislative Instrument 222.
“Remember this instrument from Parliament, or section 1C, still mandates oil marketing companies to keep a uniform price across their retail outlets,” Tasunti noted.
Uniform Pricing Within Networks
While companies enjoy the freedom to set prices independently—resulting in variations between different OMCs—each company must maintain consistency across its own network of retail stations.
This requirement stems from the existence of the Unified Petroleum Price Fund (UPPF), which equalises distribution costs nationwide.
“The reason is that in the pricing formula, we have the Unified Petroleum Price Fund, which ensures that the cost of distributing petroleum products from the depots to the retailer is borne by this fund,” Tasunti explained.
Under this arrangement, OMCs do not bear transportation costs directly. Instead, they submit monthly claims to the NPA for reimbursement of transport expenses.
“This is to ensure that the consumer in Wa, for example, pays the same price as the consumer in Accra; the consumer in Akokobi should pay the same price as the consumer in Tema,” he emphasised.
Encouraging Healthy Competition
The NPA has progressively refined its pricing guidelines to foster robust competition while maintaining market stability.
“Along the line, we are trying to make sure that, as much as we deregulated, competition is promoted, but competition must be healthy. It shouldn’t be a competition that kills the industry,” Tasunti stated.
He revealed that earlier guidelines required OMCs to set a price for an entire pricing window and maintain it unchanged until the period concluded.
“So if an oil marketing company starts the window with a price of less than ¢11, they keep the price till the window ends. They don’t amend the price,” he recalled.
2024 Policy Revision
Recognising that this restriction limited competitive dynamics, the NPA revised the policy in 2024 to permit daily price adjustments within the pricing window.
“This, we realise, does not really allow competition, because within the cost of the window, several factors can allow an oil marketing company to revise its price,” Tasunti explained.
Under the current framework, companies need only notify the regulator before implementing changes.
“So if an oil marketing company wants to reduce its price throughout the window, they can do so, but they have to inform the regulator that tomorrow, for example, I will review my price. You have to inform us today.”
Tasunti maintained that the regulatory framework strikes the right balance between commercial freedom and market order.
“And so nothing stops all marketing companies from being competitive. We’ve adjusted this pricing guideline over the period to allow them to be competitive,” he concluded.
