Fuel prices reviewed downward

Oil Marketing Companies (OMC) have reduced the retail prices of petroleum products at the Mid-October review period pegging Petrol between GH¢2.859 and GH¢2.820 whilst the prices of diesel is fixed between GH¢2.769 and GH¢2.720.

Engen Ghana Limited has pegged the price at GH¢2.820 per litre for Super and GH¢2.730 per litre for Diesel; Champion Oil, and AP Oil have all pegged the price at GH¢2.820 per litre for Super and GH¢2.720 per litre for diesel.

A Ghana News Agency team monitoring the fortnight price review in accordance with the petroleum deregulation regime observed that Total Ghana is also selling at GH¢2.838 per litre for Super and GH¢2.739 per litre for diesel.

Other Oil Marketing Companies EV Oil Company Limited, Benab Oil Company Limited, Shell Ghana Limited, Star Oil Company Limited, Allied Oil Company Limited, So Energy Ghana Limited, UBI Petroleum Ghana Limited, and Universal Oil Company Limited are all quoting very competitive prices for the products.

The prices review of petroleum products is in conformity with the de-regulation of petroleum products, which took effect from June 16.

The reduction was attributed to the marginal stabilisation of the local currency, the cedi, to other major currencies and the world crude oil price during the sixth de-regulated pricing regime for the period.

The government has decided to wash its hands off the pricing of petroleum products.

This means that the Bulk Oil Distribution Companies (BDCs) and Oil Marketing Companies (OMCs) will price their own products.

The strategy, which is the final phase of Ghana’s petroleum downstream deregulation policy, will result in the cessation of subsidies on fuel products.

Meanwhile, scores of passengers have appealed to the Ghana Private Road Transport Union to consider a downward review of transport fares to give the motoring public some respite as a result of the low prices of petroleum products.

On June 22, the GPRTU reviewed transport fares by 15 per cent, which took into consideration a number of factors in the market including fuel prices which was then at GH¢3.476 per litre for super and GH¢3.378 per litre for diesel.

 The price of fuel has now dropped to between GH¢2.859 and GH¢2.820 per litre for super, whilst the prices of diesel is fixed between GH¢2.769 and GH¢2.720 but “still we are paying higher transport fares,” Mr Eric Obeng, a public servant told the Ghana News Agency.

Ms Vera Owusu Osei, a trader, also appealed to the Ministry of Transport to engage the GPRTU to ensure that; “we the ordinary Ghanaian who patronize public transport also benefits from the fall in petroleum prices”.

Dr Raziel Obeng-Okon, a Chartered Licensed International Financial Analyst, explained to the GNA that the competition among the BDCs and OMCs has led to reduction in margins and therefore lower prices for final consumers of petroleum products.

He said some vehicle owners and commercial drivers now shop around to buy from OMCs with the lowest prices.

Dr Obeng-Okon noted that, prior to the deregulation, the OMCs used to blame the NPA for the reduction of margins but the deregulation regime has witnessed lower margins by some OMCs.

Dr Obeng-Okon, who is also an Economic/Investment Management Consultant, said OMCs could no longer blame the NPA for the determination of total retail margins even in the face of increasing ex-pump price.

He said competition and the forces of demand and supply are now the main determinant of the price mechanism.

Dr Obeng-Okon said the deregulation is beneficial to government because it ensures the paying of the outstanding debt of government to the BDCs, as well as ensures that government no longer subsidized the cost of fuel.

Under the deregulation, the BDCs have been successful in convincing government and the NPA to remove the Price Stabilisation Margins from the pricing formula.

He explained that the deregulation has also improved the liquidity position of the BDCs through the reduction of credit days for the OMCs.

Dr Obeng-Okon said competition among the BDCs has reduced the ex-refinery prices for the OMCs and thus lower prices for the final consumer.

The regulator needs to monitor the quality of petroleum products as consumers shift their attention to just the price.

Source: GNA