Institute of Statistical, Social and Economic Research (ISSER) has thrown its weight behind government’s decision to deregulate the petroleum sector as it will reduce the pressure on the public purse through the scrapping of subsidies to the sector.
A research fellow in the economics department of ISSER, Dr. Robert Darko Osei, told journalists on the sidelines of a forum to discuss the prospects and challenges of the country’s upstream petroleum sector that the directive will also get commercial actors along the petroleum value chain directly engaged in the pricing of the commodity.
“The deregulation of the downstream petroleum sector is in the right direction as it will relieve government of the subsidies to the sector at a time that the country is financially constrained.
“Also, it will allow for cost recovery and efficiency in the downstream petroleum sector as Bulk Distributions Companies (BDCs) and importers will price the commodity according to prevailing market prices to ensure that consumers get value for money.
“This is a step that should have been taken long back,” he said at the forum that was organised by the Economy of Ghana Network, a cross-sectoral professional organisation that discusses relevant topics in the interest of national socio-economic development.
Government recently announced plans to take the petroleum sector regulator National Petroleum Authority out of the process of pricing petroleum products to allow importers and marketers to reduce their price as well as pull in more private players into the sector.
Bulk Oil Distribution Companies (BDCs), Oil Marketing Companies (OMCs) and other commercial actors in the sector are backing the directive which allows them the free hand to price their products to reflect the prices according to world market prices.
They have also argued that the directive will ensure full cost recovery and efficiency in the downstream petroleum sector.
“Government’s decision to deregulate the petroleum sector will compel oil importers and dealers to fix their own prices at cheaper rates as buyers would want to buy from importers, whose prices are cheaper compared to others”, Petroleum Minister, Emmanuel Armah Kofi-Buah, said recently on a visit to the facility of the Bulk Oil Storage and Transport (BOST) in Kumasi.
The economist has also asked government to manage its expenditures to ensure that revenue from the oil sector goes to support key sectors of the economy.
“Irrespective of how much money we generate from the petroleum sector, the desired socio-economic benefits will not be met if government does not manage public spending,” he said.