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