NPA Boss educates public on fuel prices
Chief Executive Officer of the National Petroleum Authority (NPA) Mustapha Abdul-Hamid, has engaged media practitioners and the general public into the factors that inform petroleum pricing in the country.
He explained that since the inception of the deregulation regime, petroleum pricing is dictated by the forces of demand and supply, in addition to a lot of other factors.
“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 fueling the rise and fall of petroleum pricing and the whole issue of petroleum pricing is now anticipatory,” he said during a media engagement on petroleum pricing formula at the NPA office in Accra.
He further charged the media to desist from using their platforms to make petroleum pricing an ‘NDC-NPP’ matter.
He posited that the people the media claim to be experts in the matters of downstream petroleum pricing in Ghana are “not experts at all when you really get down to the nitty-gritty” of the subject.
“You are the one that will have to inform the public because I hear all of you in your stations and newspapers saying that the business of journalism is to inform, educate and entertain. So information and education are key in the work that you do. How do you educate people when you yourself are uneducated?” he quizzed.
He added “And so you ought to be educated yourself on the mechanism of petroleum pricing in a deregulated regime to be able to have the confidence to be able to talk about it. And even more importantly, to even have the confidence to correct so-called pundits when they come on your radio and television stations to as it were purportedly educate the public when what they are doing rather is miseducation the public.
“I am sure you have a lot of them sitting on your books, when an issue come you say let’s call this expert and the people that we call experts in this whole business of the downstream of petroleum price building mechanism, quite frankly if you were to go beneath the shine you would realize that they are not experts at all”.
Deregulation is a whole factor
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.
Comments are closed.