As debate intensifies over whether Ghana should scrap the fuel price floor, natural resource governance expert, Dr. Steve Manteaw, has strongly cautioned against the abrupt removal of the regulation.
He further states that scrapping the policy without safeguards could wipe out smaller oil marketing companies and concentrate power in the hands of a few big players.
A Weapon Against Smaller OMCs
In his analysis of the situation, Dr. Manteaw described the price floor policy as a “double-edged sword.” He acknowledges that while consumers may welcome cheaper fuel in the short term, he warns that the longer-term damage to competition could be severe if large oil marketing companies (OMCs) are allowed to undercut rivals without restraint.
He foresees a situation where bigger OMCs will use the non-existent price floor as a weapon to undercut prices, which could be fatal to smaller OMCs.
“Removal of the minimum price floor is a double-edged sword. While it may benefit consumers, BIG OMCs can use it to collapse small ones,” Dr. Manteaw indicated.
Lesson from History
Drawing lessons from history to support his argument, he recalled that during the newspaper price war in the United Kingdom, one major newspaper slashed its cover price to just one penny, far below production cost.
The move made it impossible for smaller competitors to survive, leading to business closures and job losses. Once competition weakened, the market was left more concentrated. Dr. Manteaw fears a similar outcome in Ghana’s petroleum sector if the minimum price floor is removed too quickly or without proper checks.
“During the newspaper price war in the U.K., a newspaper sold for 1p i.e., way below cost. This made some competitors unprofitable and led to job losses,” he recounted.
The Need for an Anti-Monopoly Commission
For Dr. Manteaw, before the country considers scrapping the price floor rule, it must first establish an Anti-Monopoly Commission. Without such a commission, he insists that the country is not institutionally ready to fully deregulate pricing in such a sensitive sector.
Such a body, he explains, would be responsible for monitoring market behaviour, preventing predatory pricing, and ensuring that large firms do not abuse their size to dominate deregulated sectors.
He said, “Before we think of removing the minimum price floor for petroleum products, we should first establish an Anti-Monopoly Commission to check monopolistic tendencies in deregulated sectors.”
The Positions of NPA and StarOil
The warning comes amid calls by StarOil for the National Petroleum Authority (NPA) to scrap the price floor so fuel can be sold more cheaply. StarOil argues that the regulation limits innovation and promotional pricing.
The NPA, however, in an interview with The High Street Journal, has firmly opposed the proposal. The regulator insists the price floor exists to protect industry stability, ensure nationwide fuel supply, and prevent destructive price wars.
According to the NPA, oil marketing companies can still run promotions and support night-time economic activity without selling fuel below the regulated minimum.
