The National Petroleum Authority (NPA) has started enforcing the “price floor” for petroleum products in the country.

The initiative, which is part of the NPA’s new pricing guidelines starts from April 16, to April 30, 2024 for the next window. 

A circular issued on April 12, 2024 to the various players in the oil marketing and distribution industry seen by Joy Business stated that a litre of petrol should not be sold below ₵13.02 by Oil Marketing Companies (OMCs) and Petroleum Service Providers (PSPs).

Diesel on the other hand will have a price floor of ¢13.07.

The directive also added that a kilogram of Liquefied Petroleum Gas (LPG) must not be sold below ¢10.52.

The notice reminded the various players including the OMCs to strictly comply with the new pricing guidelines for the industry.

The price floor announcement covers the second pricing window for petroleum products, which runs from April 16 to April 30, 2024.

Per the implementation dates of the price floor, the NPA is expected to set the price for petroleum products.

Why the price floor?

According to the NPA, the implementation of the price floor is aimed at stopping price undercutting, which threatens the stability of the industry.

Despite agitations, the NPA has explained that the implementation is being done in consultation with stakeholders in the industry.

The regulator said the price floor for petroleum products is also part of the amended pricing guidelines rolled out by the NPA on April 1, 2024.

According to the amendment, the NPA “shall set and communicate price floors for the deregulated products for each pricing window.”

The NPA has already, in a letter signed by its Deputy Chief Executive, Curtis Perry Okudzeto advised all the petroleum service providers to strictly comply with the guidelines.

The NPA stressed that it shall periodically furnish petroleum service providers with the full pricing formula, stating the specific taxes, levies, and margins applicable for each pricing window in excel format.

“The Petroleum Service Providers shall comply with the price floors set for the deregulated petroleum products for each window by not selling products below those prices”, the NPA said.

Industry Concerns

The decision to roll out the new pricing guidelines has been met with some opposition from some Civil Society Organisations.

For instance, the Executive Secretary of the Chamber of Petroleum Consumers (COPEC), Duncan Amoah has argued that it is important for all concerns to be addressed.

“If the NPA is setting a price floor for the industry, then they should also set a price ceiling as well”, he said.

In addition, the Executive Director of the African Centre for Energy Policy, (ACEP), Ben Boakye, has also argued that the market is not ready for the policy.

The Chief Executive of the Chamber of Bulk Oil Distributors, Dr. Patrick Kweku Ofori has appealed to the NPA the Bloomberg rates for setting the forex prices.