According to Mr. Buah, the decision to allow oil marketing companies to set their own prices at the pumps, based on current market conditions, is the best thing to happen for the country’s petroleum sector; and maintains that it will allow competition and market forces to determine prices of petroleum products.
He made this announcement following Parliament’s passage of the National Petroleum Authority (Amendment) bill, 2015, which among others things give legal backing to the Price Liberalisation Policy.
“The amendment that has been concluded is basically adding price liberalisation into the downstream business that allows competition and market forces to determine prices. And that is why you see that in this era when petroleum prices have gone down, the benefit is going to the consumer,” he said.
He said effects of the price deregulation policy have spread throughout the sub-region, adding: “Across the West African sub-region, the markets that are doing well have been deregulated and I am happy Ghana has taken the lead. Now we have clearly passed the amendment that states it is the market which determines prices, we believe social democratic governments will be very mindful. That is why we continue to intervene in premix fuel for fishermen. It is very critical the markets going forward will work. Price liberation is good for the ordinary consumer”
Government adopted a Full Deregulation Policy in 2005 to halt its continuous intervention in the pricing of petroleum products in the country, with the fuel subsidy bill rising astronomically to the detriment of private market players.
The Policy was also meant to ensure full cost-recovery and uniformity in pricing of petroleum products by allowing the market to determine prices, a report from the Select Committee on Mines and Energy stated.
Furthermore, for the purpose of facilitating implementation of the Policy, the National Petroleum Authority Act, 2005 (Act 691) was passed in the year 2005 to establish the National Petroleum Authority (NPA) to provide a framework for regulating the petroleum market.
Within the key mandate of the NPA under the Act is determining prices of petroleum products in the country, through application of the prescribed petroleum formula.
However, with commencing the implementation of price liberalisation under the deregulation policy, the NPA has ceased to determine prices of petroleum prices.
The reported further indicated that, currently, petroleum service providers determine the indicative maximum ex-refinery and ex-pump prices in the country. The new dispensation has therefore confined the NPA’s role to monitoring the formula’s application.