NPA explains reasons behind increases in ex-pump prices of petroleum products

The National Petroleum Authority (NPA) has explained the reasons behind recent fuel price hikes indicating that it is as a result of a rise on the international market.

In a statement issued and signed by the Corporate Affairs Directorate of the NPA in response to an intended demonstration by the Chamber of Petroleum Consumers (COPEC) and Industrial and Commercial Workers Union (ICU), it assured that the NPA will continue to monitor the prices of petroleum products on the market to ensure that they are set in conformity with the Prescribed Petroleum Price Formula.

It mentioned a number of interventions that have brought down the prices of products in the country within the period of 1st – 15th February, 2018 from 5.06% to 2.16% and from 3.60% to 1.26% for diesel;

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INCREASES IN EX-PUMP PRICES OF PETROLEUM PRODUCTS

The National Petroleum Authority (NPA) has received notice of an intended demonstration by the Chamber of Petroleum Consumers (COPEC) and Industrial and Commercial Workers Union (ICU) ostensibly in response to recent increases in the price of petroleum products at the pump by some selected Oil Marketing Companies.

We do recognise that the right to demonstrate for or against any course is a constitutionally guaranteed one and COPEC will be acting within its right as such.

We are however of the considered view that the reasons for the intended demonstration are anything but noble having regard to the interventions made time and again by the NPA by way of the Price Stabilisation interventions over the past three (3) months. The truth of the matter are as follows:

Prices of petroleum products have been on the rise on the international market. For instance, the prices of petrol and diesel on the international market have increased cumulatively by 17% and 19% respectively since November 2017;

Under the current price deregulation regime which has been in effect since July 2015, price volatility on the international market is expected to directly impact domestic pump prices because government has no direct control over the setting of the bi-weekly prices of petroleum products;

However, being concerned about the impact of the upward trend of international market prices on domestic product prices, government has since December 2017 used upfront, the expected receipts from the Price Stabilisation and Recovery Levy (PSRL) in the price build-up as a mechanism to bring stability to prices;

Since 1st February, 2018, for instance, the PSRL which hitherto were GHp12/Lt on petrol and GHp10/Lt on diesel have been completely neutralized to reduce the impact of rising prices on the international market on Ghanaian consumers. This means that government has forfeited the revenue it would have collected on these products for the period 1st – 15th February, 2018 in order to cushion consumers;

This intervention by the government has brought down the expected increase of petrol’s price for the period 1st – 15th February, 2018 from 5.06% to 2.16% and from 3.60% to 1.26% for diesel;

Despite the expected increases above after the intervention, the actual price changes observed on the market at the moment range between 0.66% and 1.08%; It is worthy to note that the large majority of Oil Marketing Companies (OMCs) still have their prices unchanged whilst some have even reduced their prices, and consumers are at liberty to purchase petroleum products from OMCs with competitive prices as expected under a price deregulated regime; and

The consuming public is hereby assured that the National Petroleum Authority will continue to monitor the prices of petroleum products on the market to ensure that they are set in conformity with the Prescribed Petroleum Price Formula.

We wish to advise all interested groups that need further clarity on the current state of petroleum product prices to contact the NPA for a discussion. This will ensure that the public is not misled by those who are motivated by reasons other than those of national interest.