Kwadwo Poku, Executive Director of the Institute for Energy Policies and Research (INSTEPR), has weighed in on the ongoing discourse surrounding fuel price competition among Oil Marketing Companies (OMCs) in Ghana.
Speaking on the issue, Mr. Poku expressed surprise at calls from some civil society organizations (CSOs) advocating for the removal of the petroleum floor price.
“I have always believed that CSOs should understand the challenges that existed prior to the introduction of a policy and evaluate whether the policy has effectively addressed those issues,” he stated.
Addressing the need for a Floor Price
Mr. Poku highlighted two key challenges that prompted the National Petroleum Authority (NPA) to implement the floor price policy; preventing losses in the downstream sector and illegal fuel imports and market distortions.
According to him, some OMCs, in an attempt to boost sales volumes, priced petroleum products below sustainable levels, leading to operational losses. Without proper accounting structures, these practices often resulted in company collapses and the accumulation of substantial debts along the value chain.
Additionally, the influx of smuggled petroleum products has historically pressured legitimate OMCs to offer unsustainably low prices. This created an uneven playing field, undermining market stability.
The floor price was introduced to protect the downstream industry. Ironically, the entities lobbying for its removal are the same ones that can no longer import and distribute illegal fuel at low cost,” Mr. Poku noted.
Balancing Competition and Sustainability
According to Mr. Poku, the NPA is committed to ensuringaffordable fuel for Ghanaians, but stressed that price reductions must be sustainable. The deregulated market framework aims to encourage healthy competition while maintaining industry stability.
“The floor price reflects the actual cost of petroleum products without profit margins. While companies may choose to sell at this price, selling below cost to cover overheads is not a viable business strategy,” he said.
He concluded by urging the public to disregard “criminal gangs lobbying to distribute illegal products in Ghana.”