The Institute for Energy Security (IES) has come to the defence of the National Petroleum Authority’s (NPA) price floor policy, describing it as a critical tool for protecting competition and ensuring long-term stability in Ghana’s deregulated petroleum market.
In a press release dated January 19, the Institute responded to recent public comments by the Chief Executive Officer of StarOil Ghana, who claimed the price floor policy prevents the company from selling fuel at much lower prices.
According to the IES, StarOil suggested it could sell petrol at GH¢9.50 per litre during off-peak night hours if the price floor regime were scrapped.
The Institute said the comments have triggered intense public debate, particularly on social media, but cautioned against reducing a technically complex policy issue to simplistic claims.
“While public engagement on energy pricing is healthy, it is important that discussions are grounded in sound market principles, regulatory context, and the long-term interests of Ghana’s petroleum sector,” the Institute stated.
The IES explained that Ghana’s downstream petroleum market is highly sensitive to global oil price movements and exchange rate fluctuations, making the sector capital-intensive and inherently risky. It stressed that the price floor was not introduced to fix prices but to stabilise competition.
“The NPA price floor was introduced as a competition-stabilising mechanism, not as a price-fixing tool,” the statement said.
According to the Institute, the policy serves several purposes, including preventing predatory pricing by dominant firms, protecting smaller and emerging oil marketing companies (OMCs), and sustaining a competitive marketplace.
The IES noted that the price floor helps to “guarantee supply continuity, particularly during periods of tight margins or market stress,” and promotes “long-term consumer welfare, rather than short-term price reductions that could lead to market concentration and higher prices in the future.”
Citing global examples, the Institute cautioned that unregulated fuel price wars often hurt consumers in the long run.
“International experiences show that unregulated price wars in fuel markets often lead to monopolisation, supply disruptions, and ultimately higher consumer prices,” it said.
The IES also raised concerns about proposals to sell fuel at lower prices during specific hours, such as at night.
“The suggestion that an individual OMC could selectively reduce prices during specific hours raises serious regulatory and competition concerns,” the statement noted.
It explained that operational costs do not reduce after dark.
“Storage, financing, distribution, and inventory risks remain constant,” the Institute added.
The IES said claims of pricing below the approved floor raise serious economic questions, including whether such prices fall below cost, whether losses are being used to eliminate competitors, and what would happen if smaller OMCs exit the market.
“These are precisely the market failures the price floor is designed to prevent,” the Institute stated.
The Institute also referenced reactions from other industry players, including GOIL Ghana. According to the IES, the Group CEO of GOIL argued that some companies pushing for lower prices “are unable to compete even at the approved floor price of GH¢9.80 per litre in the current pricing window.”
The IES said the contrast between industry realities and public messaging highlights the danger of oversimplifying fuel pricing for public attention.
It further questioned the motive behind calls to abolish the price floor.
“A critical question must be asked: would the call for removal of the price floor have arisen if StarOil were not a market leader today?” the Institute asked.
The Institute argued that protections such as the price floor have enabled many OMCs to grow and invest, warning against dismantling them once market dominance is achieved.
Following the claims, the IES formally called on the NPA to examine StarOil’s pricing structure and public assertions.
The Institute urged the regulator to “examine whether any form of attempted predatory pricing or market distortion is being either contemplated or practised,” review compliance with pricing regulations, and reinforce the principles underpinning the price floor system.
“Regulation must be evidence-based, transparent, and enforced uniformly, particularly in markets that directly affect national economic stability and household welfare,” the statement said.
The IES also called for a more informed national conversation on fuel pricing.
“The debate on fuel pricing must move beyond headline-grabbing statements to serious engagement with market economics, competition policy, and long-term consumer protection,” it said, adding that “short-term price reductions that undermine market structure are not pro-consumer in the long run.”
ALSO READ:
