NPA introduces new pricing guidelines for petroleum products

April 2, 2024
Oil Marketing Companies

The (NPA), will from April 2024 set the “floor” for the pricing of petroleum products in Ghana, which will prevent any industry player including the (OMCs) and Liquefied Petroleum Gas Marketing (LPGMC) Firms from pricing below that value or benchmark.

This is part of the Amended Pricing Guidelines rolled out by the National Petroleum Authority which is expected to take off from April 1 2024.

According to the Amendment to the Pricing Guidelines, the National Petroleum Authority “shall set and communicate price floors for the deregulated products for each pricing window, which is 1st to 15 of each month and 16th to 30 of each month.

In a letter to industry players signed by the Deputy Chief Executive of the National Petroleum Authority, Curtis Perry Okudzato the CEO of NPA, it advised all the Petroleum Service Providers to strictly comply with these guidelines.

The move is part of efforts to deal with concerns from industry players about serious price undercutting in the industry by some oil marketing companies in the country.

The National Petroleum Authority promised that it shall periodically furnish Petroleum Service Providers with the full pricing formula stating the specific taxes, levies, and margins applicable for each pricing window in Excel format.

The Petroleum Service Providers, according to the National Petroleum Authority “shall comply with the price floors set for the deregulated petroleum products for each window by not selling products below those prices.”

Background

The Amendment to Petroleum Products Pricing Guidelines follows the establishment of the committee by the National Petroleum Authority to review the Pricing De-Regulation Policy which took off in June 2015.

This was based on complaints from the industry players that after years of implementing this policy, the time has come to carry out the necessary review to better serve the industry.

It is based on the recommendations of this committee and feedback from the industry that the National Petroleum Authority is coming out with these guidelines, as captured in a letter dated 27th March 2024 and forwarded to the Oil Marketing Companies, Bulk Oil Distribution Companies and other players in the industry.

Changes to pricing of Petroleum Products from April 1, 2024

The Amendment to the Pricing Guidelines for Petroleum Products will now require the Oil Marketing Companies to send the actual prices that they will be displaying at their service stations to the National Petroleum Authority instead of the previous regime, where they were allowed to send the indicative prices to the regulator.

It added that “Petroleum Service Providers, PSPs shall no longer submit indicative ex-refinery and ex-pump prices to the National Petroleum Authority”

According to the National Petroleum Authority, “Oil Marketing Companies and LPG Marketing Companies shall notify the NPA of their actual ex-pump prices via mail to [email protected].”

“The NPA must be notified of the revised ex-pump prices by 12 noon of the working day before the effective date of the new ex-pump price.”

To ensure that all the players comply with these new guidelines, especially when it comes to the pricing of petroleum products, the National Petroleum Authority has revealed that “The NPA will also conduct regular price monitoring exercises at retail outlets to confirm the ex-pump prices of Oil Marketing Companies and the LPG Marketing Companies”

The Oil Marketing Companies (OMCs) and Liquefied Petroleum Gas Marketing Companies are also required to visibly display the ex-pump prices for all types of petroleum products sold at retail outlets on their price billboards.

“The prices displayed must always be the same as the prices on the dispensing pumps at the retail outlet” the NPA noted in the amended guidelines.

Pricing Window for the various Petroleum Products
The Amended Petroleum Products Pricing Guidelines 2024, showed that there shall be two pricing windows in a month, from the 1st to 15 th and 16th to the end of the month, based on which Petroleum Service Providers will make their reviews in line with Price Build Up of Petroleum Products.

However, the Oil Marketing Companies and Liquefied Petroleum Gas Marketing Companies can now review their prices at the service stations every day, however, they are required to notify the NPA a day before the changes are done at the pumps.

In the past, the advertised prices at the service station of Oil Marketing Companies were to be the same for all their outlets throughout the country. However, based on these new guidelines, a dealer is now allowed to give a discount of 2 per cent, to the price that has been submitted by its Oil Marketing Company.

Pricing Formula for Petroleum Products

According to the National Petroleum Authority, Petroleum Service Providers shall compute their prices (ex-refinery and ex-pump) by the Prescribed Petroleum Pricing Formula provided by the NPA.

The formula for ex-refinery and ex-pump prices are stated as stated below:

  • Ex-Refinery Price = FOB Price + Suppliers' Premium
  • Ex-Pump Price = Ex-Refinery Price + Taxes + Levies + Margins

It added that The pricing of the following petroleum products is deregulated, and shall be determined independently by PSPs using the Prescribed Petroleum Pricing Formula approved and circulated by the NPA:

  1. Gasoline
  2. (Petrol)
    • Gasoil (Diesel)
    • Liquefied Petroleum Gas (LPG)
    • Kerosene v) Marine
  3. Gasoil (MGO) Local

Sanctions For Violating Amended Pricing Guidelines

The Amendment to the Pricing Guidelines for Petroleum Products shows that Oil Marketing Companies could be fined from 5,000 to 20,000 Ghana Cedis thousand for violating a specific guideline that the National Petroleum has rolled out from April 1, 2024.

The National Petroleum Authority has given the firm assurance that it will not hesitate to sanction any Oil Marketing Company, Bulk Oil Distribution firm or Liquefied Petroleum Gas Marketing Company if they fail to comply with these new guidelines as they were based on recommendations from the various players in the industry.

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