Beginning today June 16, 2015 all Oil Marketing Companies (OMCs) will announce their ex-pump prices for petroleum products.
The pricing by the OMCs is the first step towards the full implementation of the National Petroleum Authority (NPA)’s petroleum product price deregulation.
The industry regulator, NPA, made this known in a release Monday.
“In line with the [deregulation policy], the NPA will monitor the application of the Prescribed Petroleum Pricing Formula to ensure that all Petroleum Service Providers apply the formula in the right way and defaulters will be duly sanctioned”, according to the release signed by NPA Chief Executive, Moses Asaga.
Mr Asaga further states that the implementation of this first stage of price deregulation will continue into subsequent pricing windows while the Authority reviews the existing legal framework of petroleum products pricing towards a smooth implementation of the full steps of price deregulation.
The deregulation policy is expected to allow marketers and importers of Petroleum products to set their own prices and bring an end to government subsidy on the commodity.
Delays in getting the necessary legal framework from the Attorney General as well as challenges in securing favorable price quotes from importers forced the regulator to move the date to Tuesday.
However, a meeting Monday between stakeholders in the industry and the NPA has allowed the implementation to start.
Meanwhile industry players say the current rate of the cedi's depreciation is likely to substantially increase prices of petroleum products if OMCs set their own prices.
Exchange rate and crude oil prices on the international market are key factors in the pricing formula.
But Civil Society groups and industry experts insist petroleum pricing deregulation holds many benefits for both consumers and government.
Think tank, IMANI Centre for Policy and Education say market pricing of petroleum products would allow consumers to benefit from cost reductions when price of crude oil falls.
“The era of asymmetrical pricing would be a thing of the past, as Government can no longer play politics with the prices of petroleum products. Moreover, competitive pricing from industry players will benefit consumers as they stand to enjoy higher service standards” IMANI said in a comprehensive analysis on the subject last April.
IMANI says allowing full pass-through of market prices will stimulate the economy and bring about efficient use of petroleum products, as consumers due to higher prices - that is if pricing by the OMCs shoot up prices.
“This will ultimately save the country money in terms of reducing oil consumption and imports”, according to the think tank.
Experts believe deregulation and hence de-subsidisation would release needed funds for Government to undertake critical capital projects that will bring about required socio-economic development.
The Government will also have less financial headache as it unshackles itself completely from the risks associated with industry operations, the experts say.
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