Dr Mustapha Abdul-Hamid, the Chief Executive of the National Petroleum Authority (NPA), has called for the depoliticisation of petroleum pricing and deregulation regime.
“The issue of petroleum pricing should not be an NDC and an NPP matter, because petroleum pricing basically drives the economy, drives agriculture, drives the market, drives productivity in work places and so forth. Everybody thrives on petroleum,” Dr Abdul-Hamid stated on Wednesday in Accra at the NPA’s Media Engagement on Petroleum Pricing Formula Post Deregulation.
“And so, an educated journalism fraternity on the Pricing of Petroleum Mechanism in a Deregulation environment is very critical for the survival of our nation and the peace of the nation.”
The goal of the workshop was to ensure that the public was well informed on the issue of petroleum pricing.
Petroleum price deregulation is the removal of government control in the pricing of petroleum products and allowing market forces to determine the prices of petroleum products.
The Price Deregulation Policy was implemented on July 1, 2015.
Before this policy, the NPA set and published the Ex-Refinery and Ex-Pump prices of all petroleum products whilst the government frequently intervened in the computation of prices of petroleum products when prices were regulated.
Dr Abdul-Hamid, who urged the media to always ensure that Ghanaians were well informed, said under his leadership, he would ensure that the interaction between the Authority and media was a constant feature.
He said before the coming into force of the Price Deregulation Policy in 2015, in every election year petroleum pricing was always the top most issue of contention between Governments and opposition.
“I remember from 1992, then 1996, then 2000, then 2004, and then even 2008, where opposition parties would always hold a gallon in a rally and say that when we were in power, this was how much a gallon of fuel was being sold, and now these people have come and it is gone up, so we should kick them out….”
He said it had gotten to a point where the petroleum price doesn’t feature anymore as a major discourse in political contention, saying “Why? Because of one word – Deregulation.”
He noted that in times past, the issue of petroleum pricing was contentious because at that time Governments fixed prices of petroleum products and so one could accuse the ruling Government of being the reason why petroleum prices were rising; directly because they fixed it.
Dr Abdul-Hamid said since the establishment of NPA in 2005, coupled with the passage of the Price Deregulation Policy in 2015, a total deregulation regime was achieved in the fixing of petroleum prices.
He said the elementary definition of deregulation was that one allowed the forces of demand and supply to dictate the pricing of petroleum products.
“So, now Government had nothing to do with the pricing of petroleum products, it is dictated by the forces of demand and supply, by the geopolitics of either the Gulf or the geopolitics of European Market, it depends on the politics of nations, it depends on the economies of Organization of Petroleum Exporting Countries (OPEC),” adding that the petroleum pricing was determined by a mixture of international politics and the local economy.
Mr Abass Ibrahim Tasunti, Head, Pricing, NPA, in his presentation, dubbed “Pricing of Petroleum Products in Ghana,” said there were two pricing windows in a month 1st and 15th and 16th and end of the month.
He noted that prices were reviewed within these two windows by Bulk Oil Distribution Companies (BDCs) and Oil Marketing Companies (OMCs).
He said the key components of the price build-up which lead to volatility in prices every window were the world market prices and the Ghana Cedi/dollar exchange rate.
“These two variables change every pricing window and depending on whether they go up or down, they lead to ex-pump price decreases or increases”.
Concerning NPA’s role in a deregulated price environment, Mr Tasunti said the Authority ensures that BDCs and OMCs set prices by the prescribed petroleum pricing formula and also determines the price benchmarks BDCs must use in setting the ex-refinery price of each petroleum product.