Civil Society Organisations (CSOs) in Ghana’s energy sector have cautioned government over the current state of the country’s downstream petroleum industry, saying that, without urgent policy reforms, the sector could collapse.
In a joint statement Issued by the Centre for Environmental Management and Sustainable Energy (CEMSE) and the Institute for Energy Policies and Research (ITEPR) highlighted high credit risks, poor debt management, and weak regulatory enforcement as major threats undermining the industry’s stability.
The CSOs said stability and availability of petroleum products in the market hanged on a volatile system, however, making Ghanaian consumers paying for high credit and bad debt management in the current system.
The statement, signed by CEMSE Executive Director Mr Benjamin Nsiah and ITEPR Executive Director Mr Kwadwo Poku, outlined deep-rooted challenges that have persisted in the sector for years.
The CSOs commended Ghana’s transition from a regulated to a partially deregulated market, especially after the removal of fuel subsidies in 2015 which was meant to increase competition and efficiency. However, they argue that while the number of market participants has increased operational efficiency has not improved.
Since deregulation, the number of Bulk Distribution Companies (BDCs) has moved from 31 in 2015 to 53 in 2024, a more than 70% increase. Similarly, Oil Marketing Companies (OMCs) moved from 139 in 2015 to over 200 in 2024, peaking at a growth rate of 19.79% in 2021.
Despite this expansion, average annual petroleum sales per OMC have remained stagnant at 24,990 metric tonnes, almost the same in 2015.
The CSOs pointed to weak enforcement by regulators as a key factor enabling underreporting of sales volumes, tax evasion, and the sale of substandard petroleum products.
They revealed that in 2024, some OMCs did not lift products from any depots, yet their indicative prices were still published by the National Petroleum Authority (NPA). This raises concerns that these companies may be sourcing and selling low-quality petroleum products of unknown origin.
Furthermore, the CSOs alleged that politically connected companies were exploiting loopholes in the system, obtaining OMC licenses without owning physical stations. These entities, they claimed, divert petroleum products and evade taxes, depriving key state institutions such as the Ghana Revenue Authority (GRA) and the Bulk Oil Storage and Transportation Company (BOST) of revenue.
“These politically sponsored companies use the petroleum downstream as a quick money-making avenue at the expense of ordinary consumers,” the CSOs stated.
To restore financial sustainability and eliminate market volatility, the CSOs said licensing requirements should be tighten and increase the minimum number of stations required for an OMC license from seven to ten.
It said enforcing strict penalties against board members who approve companies that do not meet these criteria and enhance monitoring mechanisms to prevent underreporting, tax evasion, and the sale of substandard fuel.
The CSOs urged the new management and board of directors at the NPA to take swift action to safeguard the downstream sector.
