John Attafuah warns against Cartels in new fuel pricing regime

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 John Attafuah, Former NPA Boss

John Attafuah, Former NPA Boss

As announced that, from June 15, the National Petroleum Authority (NPA) will no longer be involved in the pricing of petroleum products.

A former Chief Executive Officer of the NPA, John Attafuah warned that there is a high tendency that cartels will crop up therefore it is important for the Authority to be alert because ?we don?t have to take any chances with that.?

According to him, the NPA Act criminalizes cartelization because the framers of the Act knew very well that the development of cartels was highly possible, therefore, the Authority must effectively undertake its watchdog role.

However, NPA has said it trusts the Bulk Oil Distribution Companies (BDCs) to fairly price petroleum products.

The Authority?s Chief Executive Officer (CEO), Moses Asaga said although his outfit will no longer be involved in the pricing of petroleum products, it will still have an oversight responsibility.

?The NPA will still be a watch dog in the sense that NPA will still be monitoring international prices, NPA will be monitoring exchange rate movements and will also do its own calculation which will be a standard,? he explained.

Per the announcement, this means importers of the petroleum products, that is,  the Bulk oil Distributing Companies and the suppliers of petroleum products will now bring in their products into the country at competitive prices and then sell to Oil Marketing Companies (OMCs) at competitive prices.

The OMCs will then pass on the prices to the retailers at the pump.

Aside the issue of cartelization, Mr. Attafuah in an interview mentioned other challenging situations likely to emerge with the new development.

The former NPA boss said monopoly situations should be avoided.

According to him, it will be very risky to allow individuals or certain groups of people to dominate the petroleum sector which will restrict competition and eventually make Ghanaians ?just pawns in the game.?

Attafuah thus urged the NPA ?to ensure that no player in this field is given unfair advantage to the extent that it becomes a monopoly or we get cartels formed especially when politicians become the unseen hands with these players in the industry.?

Since this announcement was made, concerns have been raised over this new policy in relation to timing, the pricing and the quality of products which will be sold to consumers.

However, Mr. Asaga said the BDCs and OMCs cannot ?collude? with the pricing of the products. ?I don?t think so?we are not saying at the beginning it?s going to be easy.?

He indicated that the NPA will be ?collecting indicative prices from the OMCs which will then be published just like the banks will always publish their base rates.?

This, he said will help consumers know which of the OMCs have lower or higher prices and subsequently make a choice.

?We believe that when it stabilizes, competition can even bring down prices which will mean that government will no longer have the business of saying they want to subsidize because now it will be a private sector issue.?

John Attafuah has also charged the NPA to be very transparent in licensing players in the petroleum industry.

He said ?the issue of local content, the issue of infrastructural development of the various players must be looked at and done transparently so that we don?t run into any problems.?

He was convinced that all these problems could arise if politicians become owners of the BDCs.

This, the former NPA boss said will result in a situation where ?decisions may not be in the boardrooms but behind the scenes and therefore nobody gets to know what is going on but it?s just politicians deciding what to do with the industry so that they can make money.?

John Attafuah said he is sure that the officials at the NPA and the Authority?s board are capable of ensuring that Ghanaians are fairly treated in the new pricing regime.

He nonetheless indicated that should the NPA fail in exercising its oversight responsibilities, Parliament?s committee on energy can play their role and ensure that they police the sector to ensure that we don?t get cheated along the line.

Moreover, NPA has defended the timing of the decision saying, the timing is right despite the various economic challenges facing the nation.

According to them, if the government decides to wait until all economic problems are fixed, this new policy will not see the light of day.

?Timing is important but if you are dealing with a developing country, then you will never take an important decision because always our timing will be wrong because when one aspect of the economy is improve, another aspect may not be improving,?  the NPA boss explained.

In relation to ensuring that only quality products are sold to the public, the NPA gave the assurance that over the years, it has compromised on quality due to the existence of the petroleum product marking scheme which is used to test petroleum products.

Asaga remarked that before this marking scheme was introduced, ?the failure rate of dilution and adulteration was 34% but since two years ago when this was introduced, the failure rate to 5% and now if you ask the OMCs, we are doing about 2% so in terms of quality, we still continue to monitor.?

He admitted that although there might be attempts to bring in low quality, ??the NPA is now going to get a special unit made up of chemists, chemical engineers and analytical chemists to be part of the pre-inspection at the harbour before the discharge is made at the depot.?

The NPA boss disclosed that his outfit will engage Parliament on the new pricing regime.

He stressed that the new policy ?should be a national issue because whether its NDC or NPP, none of these governments can sustain subsidies because?governments upon governments have been thinking this deregulation.?

Source: Adnan A. Mohammed

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