By Starting from April 2024, the National Petroleum Authority (NPA) will implement a pricing floor for petroleum products in Ghana, prohibiting any industry entity, including Oil Marketing Companies (OMCs) and Liquefied Petroleum Gas Marketing (LPGMC) Firms, from setting prices below this established benchmark.
This initiative is outlined in the Amended Pricing Guidelines introduced by the NPA, set to be effective from April 1, 2024.
As per the amendment, the NPA will establish and communicate price floors for deregulated products during each pricing window, which spans from the 1st to the 15th and the 16th to the 30th of every month.
In a letter addressed to industry stakeholders and signed by the Deputy Chief Executive of the National Petroleum Authority, Curtis Perry Okudzato, on behalf of the CEO of NPA, all Petroleum Service Providers are advised to adhere strictly to these guidelines.
This action is a response to concerns raised by industry players regarding significant price undercutting by certain oil marketing companies in the country.
The National Petroleum Authority has committed to regularly providing Petroleum Service Providers with the complete pricing formula, detailing the specific taxes, levies, and margins applicable for each pricing window in an Excel format.
According to the National Petroleum Authority, Petroleum Service Providers are required to adhere to the established price floors for deregulated petroleum products during each pricing window, refraining from selling products below these designated prices.
Background
The Amendment to Petroleum Products Pricing Guidelines follows the establishment of the committee by the National Petroleum Authority to review the Pricing De-Regulation Policy which took off in June 2015.
This was based on complaints from the industry players that after years of implementing this policy, the time has come to carry out the necessary review to better serve the industry.
It is based on the recommendations of this committee and feedback from industry that the National Petroleum Authority is coming out with this guidelines, as captured in a letter dated 27th March 2024, and forwarded to the Oil Marketing Companies, Bulk Oil Distribution Companies and other players in the industry.
Changes to pricing of Petroleum Products from April 1, 2024
The Amendment to the Pricing Guidelines for Petroleum Products, will now require the Oil Marketing Companies to send the actual prices that they will be displaying at their service stations to the National Petroleum Authority instead of the previous regime, where they were allowed to send the indicative prices to the regulator.
It added that “Petroleum Service Providers, PSPs shall no longer submit indicative ex-refinery and ex-pump prices to the National Petroleum Authority”
According to the National Petroleum Authority, “Oil Marketing Companies and LPG Marketing Companies shall notify the NPA of their actual ex-pump prices via mail to pricing@npa.gov.gh.”
“The NPA must be notified of the revised ex-pump prices by 12 noon of the working day before the effective date of the new ex-pump price.”
To ensure that all the players comply with these new guidelines, especially when it comes to the pricing of petroleum products, that National Petroleum Authority has revealed that “The NPA will also conduct regular price monitoring exercises at retail outlets to confirm the ex-pump prices of Oil Marketing Companies and the LPG Marketing Companies”
The Oil Marketing Companies (OMCs) and Liquefied Petroleum Gas Marketing Companies are also required to visibly display the ex-pump prices for all types of petroleum products sold at a retail outlet on their price billboards.
“The prices displayed must always be the same as the prices on the dispensing pumps at the retail outlet” the NPA noted in the amended guidelines.
Pricing Window for the various Petroleum Products
The Amended Petroleum Products Pricing Guidelines 2024 , showed that there shall be two pricing windows in a month , that from 1st to 15 th and 16th to the end of month , based on which Petroleum Service Providers will make their reviews in line with Price Build Up of Petroleum Products.
However, the Oil Marketing Companies and Liquefied Petroleum Gas Marketing Companies can now review their prices at the service stations every day, however they are required to notify the NPA a day before the changes are done at the pumps.
In the past, the advertised price at the service station of Oil Marketing Companies were to be the same for all their outlets throughout the country. However, based on these new guidelines, a dealer is now allowed to give a discount of 2 percent, to the price that has been submitted by its Oil Marketing Company.
Pricing Formula for Petroleum Products
According to the National Petroleum Authority, Petroleum Service Providers shall compute their prices (ex-refinery and ex-pump) in accordance with the Prescribed Petroleum Pricing Formula provided by the NPA.
The formula for ex-refinery and ex-pump prices are stated as stated below:
➢ Ex-Refinery Price = FOB Price + Suppliers’ Premium
➢ Ex-Pump Price = Ex-Refinery Price + Taxes + Levies + Margins
It added that, The pricing of the following petroleum products is deregulated, and shall be determined independently by PSPs using the Prescribed Petroleum Pricing Formula approved and circulated by the NPA:
i) Gasoline
ii) (Petrol)
iii) ii) Gasoil (Diesel)
iv) iii) Liquefied Petroleum Gas (LPG)
v) iv) Kerosene v) Marine
vi) Gasoil (MGO) Local
Sanctions For Violating Amended Pricing Guidelines
The Amendment to the Pricing Guidelines for Petroleum Products shows that Oil Marketing Companies could be fined from 5,000 to 20,000 Ghana Cedis thousand for violating a specific guideline that the National Petroleum has rolled out from April 1, 2024.
The National Petroleum Authority has given the firm assurance that it will not hesitate to sanction any Oil Marketing Company, Bulk Oil Distribution firm and Liquefied Petroleum Gas Marketing Company if they fail to comply with these new guidelines as they were based on recommendations from the various players in the industry.
