Based on a circular sent to the OMCs and Bulk Oil Distribution Companies, seen by JOY BUSINESS, a litre of petrol is not expected to be sold below GH¢13.63.

This represents some marginal increase from the GH¢13.02 announced by the NPA when the policy started from April 16, 2024.

Diesel has been kept unchanged with a price floor of GH¢13.07 a litre.

The NPA also directed that a kilogram of Liquefied Petroleum Gas (LPG) must not be sold less than, GH¢10.55 pesewas.

This represents an increase from the GH¢10.52 quoted from April 16 2024.

The circular reminded all the various players including the OMCs to strictly comply with the new pricing guidelines for the industry.

The price floor announcement covers the second pricing window for petroleum products, which runs from April 16 to April 30, 2024.

According to some industry analysts, the new pricing floor, for the window, could cause prices of petrol to go up slightly from May 1 to May 15, 2024.

NPA on the new pricing guidelines

The NPA has explained that the price floor is needed to check undercutting in the industry.

It maintained that some corrupt practices if not checked could threaten the stability of the industry.

The programme has faced some criticism from players in the industry, who have described the policy as anti-free market programme.

The NPA has justified its decision, insisting that the policy will check undercutting.

The NPA added that the price floor is also part of the Amended Pricing Guidelines rolled out on April 1, 2024.

According to the Amendment to the Pricing Guidelines, the NPA “shall set and communicate price floors for the deregulated products for each pricing window.”

In a letter to industry players signed by the Deputy Chief Executive of the NPA, Curtis Perry Okudzeto advised all the Petroleum Service Providers to strictly comply with the guidelines.

The NPA promised that it shall periodically furnish Petroleum Service Providers with the full pricing formula, stating the specific taxes, levies, and margins applicable for each pricing window in excel format.

The Petroleum Service Providers, according to the NPA “shall comply with the price floors set for the deregulated petroleum products for each window by not selling products below those prices”.

Industry Concerns

A month after introducing this policy, some players in the industry continue to raise concerns about the programme.  The Chamber of Bulk Oil Importers for instance have raised concerns about the Forex Rate used in setting the price floor. They want the NPA to use the Bloomberg Rates for the forex component in setting the prices, rather than the Bank of Ghana rates.

The Executive Secretary of the Chamber of Petroleum Consumers (COPEC) Duncan Amoah argued that “If the NPA is setting a price floor for the industry, then they should also set a price ceiling as well”.

The Executive Director of the African Centre for Energy Policy, Ben Boakye, has also argued that the market is not ready for the policy, due to the current challenge facing the sector.

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This follows the review of the Ghana Standard for gasoline (GS140:20220) to align with the requirements of regular grade gasoline with EURO IV and ECOWAS standards for gasoline. 

The new standard also requires that premium grade gasoline requirements comply with EURO V standard.

The regulator of the downstream petroleum sector has, therefore, directed that effective January 2024, all gasoline [petrol] imported into Ghana must meet EURO IV & EURO V for regular and premium grades respectively.

“The standard has become higher, particularly in terms of Manganese which is now maximum of six milligrams per litre (mg/L) for regular petrol and 2mg/L maximum for premium petrol,” the Chief Executive Officer of the NPA, Dr Mustapha Abdul-Hamid, has said.

The upgraded standard Graphic Online understands should not affect prices. 

It is compulsory for all oil marketing companies (OMCs) and that the Tema Oil Refinery (TOR) is capable of meeting the Standard particularly the regular petrol.

Previous standard

The previous standard, the NPA said, was 18mg/L for both regular and premium petrol.

The review was undertaken in collaboration with Ghana Standards Authority (GSA) and other relevant stakeholders.

It is compulsory for all oil marketing companies (OMCs) to comply with the new standard by January 1, next year.

Complaints

The NPA explained that it had received reports and customer complaints in relation to the quality of petrol on the Ghanaian market.

Graphic Online understands, the current standard has become higher particularly in terms of Manganese which is now maximum of 6mg/L for regular petrol and 2mg/L maximum for premium petrol.

The previous standard was 18mg/L for both regular petrol and premium petrol.

Review

The rationale for the review include changes in engine technology as well adoption of the new improved standards for the sub-region.

“A significant number of spark ignition vehicles in Ghana are designed to run on gasoline that conforms with EURO IV and EURO V requirements,” the NPA said, adding that such vehicles were equipped with advanced technologies that required lower or no metal additives in gasoline to ensure optimal engine performance.

ECOWAS

Again, the NPA said ECOWAS had also directed that all member states must adopt harmonised specifications for both gasoline and diesel. 

However, Ghana being the first country in ECOWAS to adopt Ultra-Low Sulfur content of 0,005 per cent or 50 parts or particles per million (50ppm) sulphur levels in both gasoline and diesel is already compliant with most of the key parameters in the ECOWAS specifications for gasoline except for trace metals. 

It explained that adhering to international standards ensured that the country was aligned with global norms. 

“This fosters international collaboration, trade and promote the use of more efficient and eco-friendly vehicles which run on good quality fuels,” the NPA added.

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