Nearly eight years after Ghana introduced a price regulation policy for petroleum products, the National Petroleum Authority (NPA) is warning that removing the price floor, which was recently introduced, could do more harm than good to the industry and, ultimately, consumers.
The Director of Economic Regulation and Planning at theNPA, Abass Ibrahim Tasunti, explains that the price regulation was introduced in July 2015 to bring sanity and sustainability into a fiercely competitive downstream petroleum market.
Speaking in an interview with The High Street Journal, he noted that a multi-stakeholder review that introduced the price floor policy, about two years ago, as part of the price regulation, revealed troubling practices that justified why the policy was needed.
Chief among them was widespread price undercutting, where some oil marketing companies sold fuel below cost simply to outdo competitors.
He noted that such undercutting is often driven by intense competition, but without safeguards, it can quickly turn destructive. When companies cannot cover their costs, they struggle to maintain operations, pay suppliers, or invest in infrastructure.
This, he warned, could lead to fuel shortages and disruptions in supply, which could threaten the sustainability of the sector.
“During this review process, one of the issues that came up strongly was the fact that there was a big price undercutting in the industry, and we see that there were issues about companies selling below cost, and even if an industry is facing this, it’s affecting the sustainability of the industry. So this sometimes arises when there’s fierce competition in the industry, and when this happens, it can lead to other challenges that will threaten the supply of petroleum products,” Abass Ibrahim Tasunti explained.
The NPA’s role, Tasunti stressed, is to strike a delicate balance. On one hand, the regulator must ensure consumers are not overcharged and receive value for money. On the other hand, it must protect petroleum service providers so they remain viable and able to keep fuel flowing across the country.
He explained that the price floor is not designed to guarantee profits or stifle competition, but to prevent a race to the bottom that could wipe out players and destabilise the market.
By setting a minimum price, the policy discourages reckless pricing while still allowing competition through service quality, efficiency, and innovation.
“As a regulator, we are mandated to protect both the consumer and the petroleum service provider. So while we are ensuring that consumers get value for money, they are paying the right price for the right product, we also have to ensure that the industry is protected to continue supplying the products for consumers to have access to them,” he insisted.
As debates continue over whether the price floor should be scrapped, the NPA insists that any decision must carefully consider the long-term health of the industry.
