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Petroleum price deregulation kicks off; OMCs expected to announce prices today

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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 firststep towards the full

implementation of the National Petroleum Authority (NPA)’s petroleum

product price deregulation.

The industry regulator, NPA, madethis 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 theright 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 implementationof 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 ofcrude 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 acomprehensive

analysison 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.

Credit: Myjoyonline.com

Kofi Oppong Kyekyeku

I am a Ghanaian Broadcast Journalist/Writer who has an interest in General News, Sports, Entertainment, Health, Lifestyle and many more.

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