Head of Economic Relations at the National Petroleum Authority, Abbas Tasunti, says there is no cartelisation of the petroleum industry in Ghana.

According to him, apart from Ghana’s laws frowning on the creation of cartels particularly in the petroleum industry, the oversight duties of the NPA also ensures that cartelisation is prevented.

He was explaining the similarities in pricing of petroleum products between oil marketing companies on the market on PM Express Business Edition.

He said the reason for the similarities in the prices of some OMCs is largely due to brand strength and competition.

https://www.youtube.com/watch?v=mHBJYGNUSBk

Abbas Tasunti explained that companies in the petroleum industry are clustered according to brand strength and thus compete within their clusters.

“The top three have very similar brand strengths and therefore they compete among each other. And there’s another layer of oil marketing companies you’d realise that their price are also very close, I don’t want to mention company names but if you monitor the market you’d notice that there is another cluster of companies who also price very closely to each other.

They compete among themselves at that level. And there is another category who also compete, who are lower end. So if you look at the top three whose overhead may be higher than the smaller companies and therefore their price may vary,” he said.

He noted that to ensure competitiveness, companies within the same cluster tend to price their products similarly.

“Now the top three there’s nothing wrong actually at one company looking at the other and pricing similar to them. Like I said their brand strengths are very similar and therefore I think if you look at this particular window which we are, I’m sure you’ll notice that one of the top three had higher price than the other two but with time they also adjusted because clearly if you have the same brand strength and you decide to stay up, consumers are very sensitive to price, and if our brand strength are very close, consumers may move to the other competitor and therefore they appear to price similarly,” he said.

Mr. Tasunti explained that even as the market is kept free, the NPA still ensures that OMCs and other petroleum companies price their products realistically in order not to shortchange consumers.

He noted that so far, fears of cartelisation have not been realised and the NPA is resolute in ensuring that cartels are not formed in the industry.

“But when you look at their margins, we do analysis of their margins because they buy at different prices from the importers and they price at the same at the pump their margins are not the same.

“So if they were to be a cartel, I think we also have to note that cartelisation is wrong and our Act frowns against cartelisation and that’s why we also review the prices. We do not close our eyes to the price on the market,” he said.