Ghana is bracing up for full reregulation of the downstream petroleum sub-sector in the country.
The Director, Projects Monitoring & Evaluation, National Petroleum Authority, Sheila Abiemo, made this known at the 6th Public Lecture Series on Ghana Oil, Gas & Power organised by the Institute of Oil and Gas Studies, GNPC Office, University of Cape Coast, Ghana with the theme: Downstream Petroleum Market Deregulation: Impact on the Macroeconomy of Ghana, held in December, 2021.
“Deregulation policy focus removal of restrictions on the importation of Crude Oil and Petroleum Products. Removal of restrictions on the establishment and operation of facilities. Price de-control that is price liberalization”, she said.
Talking about the rational for deregulation, she said, deregulation of the downstream petroleum sub-sector intended to encourage private sector to invest in provision of infrastructure and invest provision of other services including participation in Crude oil and petroleum products imports.
Government involvement in pricing according to her repeatedly led to significant debts (Forex and products losses) in the book of government itself, TOR, and Service providers mainly due to subsidies.
Speaking further, she said, here deregulation is also intended to reduce financial burden on government as well as ensure efficiency in pricing petroleum products.
The journey which started since 1996, she said recorded success which include private sector involvement in provision, Port, Storage, distribution and retail. Improvement in local participation, local skills and capacity, reduction in subsidy bill.
The Director however noted the challenges as deregulation of product transportation is pending, unhealthy competition and illegal fuel supply activities (dumping, imports, diversion) subsidy of social products.
Abiemo noted that deregulation allows industries to operate business more freely, make decisions efficiently and remove corporate restriction.
This she noted has brought about some level of competition in the pricing of petroleum products in the country.
She maintained that the role of government is to ensure the playing field is levelled for all players which is exercised through the National Petroleum Authority, NPA.
“The game of survival in the deregulated environment according to her is competitive pricing and full cost recovery. These factors are very crucial for business competiveness, and this require new strategies and requisite manpower”, she noted.
Speaking on Full Downstream Petroleum Price deregulation, is Political Expediency a hindrance, the CEO, Association of Oil Marketing Companies, Kwaku Agyemang-Duah, said interest groups such as government, Media Outlets, Journalists, Ghana Private Road Transport Union, GPRTU, Chamber of Petroleum Consumers, COPEC, Institute of Energy Security, IES, Market traders, directly or indirectly interfere in the pricing of fuel by OMCs/LPGMCs, through their statements and publications.
He stated that political Expediency affect OMCs/LPGMCs as they are not able to price petroleum products well by sacrificing their margin to subsidise fuel prices
“The face difficulties in promptly satisfying petroleum product tax and levies payment obligations, they also struggle to meet their financial obligation including staff enumerations and other operational overheads employees”, he said.
This according to him has cost implication in upgrading stations to conform with the high safety standards.
The Lecture Series was moderated by Omowumi Iledare, the Professorial Chair, GNPC Office/UCC Center for Excellence in Petroleum Commerce, Institute for Oil and Gas Studies, University of Cape Coast, Ghana.
“Ghana’s deregulation of the downstream petroleum sub-sector is commendable, thought they are not there yet. The academia should be carried along in this Journey”, he said.
