19th July 2024

Dr Mustapha Abdul-Hamid

The Chief Executive Officer of the National Petroleum Authority (NPA), Mustapha Abdul-Hamid, has said that the discourse about Ghana’s petroleum pricing should not be made political.

 

He explained that since the inception of the deregulation regime, petroleum pricing is dictated by the forces of demand and supply, geopolitics of either the Gulf or the geopolitics of OPEC economies as well as the liquidity of banks.

 

“It is all a mixture of international politics, local economies, international economies and the capacity of BDCs, and so on, to be able to bring products into our country. So, the whole deregulation mix is a complex mixture of factors that are political, geographical, economic and social.

 

“Because of that mix, it is confusing because at a point, you won’t know which factor is fuelling the rise and fall of petroleum pricing and the whole issue of petroleum pricing is now anticipatory,” he added.

 

Dr Abdul-Hamid made the call during a media engagement on petroleum pricing formula post deregulation on Wednesday at the NPA office in Accra.

 

Awareness

 

The NPA boss noted that the task of nation building is very difficult, hence the need to engage journalists who are equally important in the nation building effort.

 

He encouraged media organisations not to use their platforms to make petroleum pricing an ‘NDC-NPP’ matter.

 

“Petroleum pricing basically drives the economy, agriculture, the markets, productivity in work places and more,” he noted, adding that an “educated journalism fraternity on petroleum pricing in a deregulated environment is very critical for the survival of our nation and the peace of our nation.”

 

He therefore pledged the commitment of his outfit to running an open door policy in terms of ensuring that its activities is made known to the public through the media.

 

“Beyond this workshop, from now on, NPA will become a more interactive organissation, a more socially engaged organization that will allow the public to appreciate our operations,” he said.

 

Price deregulation

 

In a presentation on the pricing formula, Head of Pricing at NPA, Abass Ibrahim Tasunti, explained that the unsustainable nature of subsidies and their impact on the government finances delayed in payment of accumulated subsidies.

 

This, he said, resulted in the inability of Bulk Import, Distribution and Export Companies (BIDECs) to raise Letters of Credit to import products, due to liquidity challenges created by the delayed payment of accrued subsidies, and foreign exchange (FX) rate losses arising out of the depreciation of the Cedi against the US Dollar, hence the need for deregulation.

 

The deregulation, which simply is the removal of government control in the pricing of petroleum products and allowing market forces to determine the prices of petroleum products, was implemented on July 1, 2015.

 

He explained that prior to this policy, the NPA set and published the Ex-Refinery and Ex-Pump prices of all petroleum products.

 

On the frequency of price review, Mr Abass Tasunti said there are two pricing windows in a month, which are 1st – 15th and 16th – end of month.

 

He said prices are reviewed within these two windows by BIDECs and Oil Marketing Companies (OMCs).

 

“The key components of the Price Build-Up (PBU), which lead to volatility in prices every window, are the world market prices and the GHS/USD exchange rate. These two variables change every pricing window, and depending on whether they go up or down, they lead to ex-pump price decreases or increases,” he added.

 

He noted however that premix fuel, used by canoe fishermen, residual fuel oil, used by the industrial and manufacturing sector, aviation turbine kerosene (ATK), used by the airline industry, gasoil to the mining sector, gasoil used by the oil rigs, and marine gasoil (MGO) foreign, gasoil used by foreign maritime vessels are currently regulated by the government.

 

“The prices for these products are revised every two weeks and announced by the NPA,” he said.

 

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