Amid the fuel price debate, the National Petroleum Authority (NPA) has rejected the advocacy by StarOil to scrap the fuel price floor regulation, arguing that the company can still support Ghana’s night economy without breaking existing pricing rules.
According to the NPA’s Director for Economic Regulation and Planning, Abass Ibrahim Tasunti, selling fuel at night does not automatically change the cost of importing, storing, or distributing fuel, and hence calls for selling below regulation price at night falls flat.
The Chief Executive Officer (CEO) of StarOil, Kwame Tieku, recently hinted that StarOil is willing to sell fuel at a price lower than the NPA floor price at night just to promote the night economy in furtherance of the government’s 24-Hour economy initiative. However, handicapped by the regulation.
“Imagine StarOil pricing petrol at 9.50 per litre after 10 pm each night till 4 am to support night time economy when demand is lower… but that will be below the NPA floor price,” the CEO of StarOil noted.
But the NPA maintains that the regulation exists to protect the industry and ensure a steady fuel supply across the country, not to frustrate innovation or competition.
Abass Ibrahim Tasunti further argues that instead of clamoring for the regulation that protects both industry and consumer to be scrapped, promotional pricing does not require scrapping the price floor.
He points out that oil marketing companies are free to run promotions that reward customers without directly cutting pump prices below the regulated minimum.
“If you’re selling at night, it doesn’t mean that the cost of buying the product has changed, or the cost of consuming the product has changed. So that argument is unjustified. But you don’t insist that the policy that is protecting the industry and ensuring the sustainability of supply for all the industry should be scrapped because of your own intention. So I think that if a company or an outlet wants to run promos, you can run promos even with this regulation in there,” the NPA director noted.
For instance, he suggested that instead of selling below the regulatory price, it could offer to give an additional litre for free if a customer buys five litres.
He said, “you can say if you buy at night, if you buy five litres, I’ll give you one litre for free. OK. Nothing stops you from doing that. The regulations are there for a reason. So you cannot stop the regulation.”
The NPA director further challenged StarOil to first demonstrate that it is consistently selling fuel at the approved price floor during the day. Without that, he says, it is difficult to argue convincingly that the regulation is what prevents the company from selling cheaper fuel at night.
The NPA further questioned why StarOil appears to be alone in pushing for the removal of the price floor. With over 200 oil marketing companies operating in Ghana, Tasunti says it is telling that the Chamber of Oil Marketing Companies (COMAC), which represents industry players, has not thrown its weight behind the proposal.
The NPA says it fully supports the idea of a 24-hour economy, but not at the expense of rules that keep the fuel market stable and fair for all players.
