The Institute for Energy Security (IES) has defended the National Petroleum Authority’s (NPA) price floor policy, describing it as a vital safeguard for fair competition and the long-term stability of Ghana’s deregulated petroleum market.
In a press release dated January 19, the Institute responded to recent public comments by the Chief Executive Officer of StarOil Ghana, who suggested that the price floor regime prevents the company from selling fuel at much lower prices.
According to the IES, StarOil claimed it could sell petrol at GH₵ 9.50 per litre during off-peak night hours if the price floor were removed.
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The IES said the comments had triggered intense public debate, particularly on social media, but cautioned against reducing a complex policy issue to headline-friendly claims.
“While public engagement on energy pricing is healthy, it is important that discussions are grounded in sound market principles, regulatory context, and the long-term interests of Ghana’s petroleum sector,” the Institute stated.
The IES explained that Ghana’s downstream petroleum market is highly sensitive to global oil prices and exchange rate movements, making it both capital-intensive and risky. It said that the NPA price floor was introduced to stabilise competition, not to fix prices.
“The NPA price floor was introduced as a competition-stabilising mechanism, not as a price-fixing tool,” the statement said.
According to the Institute, the policy plays several critical roles, including preventing predatory pricing by dominant firms, protecting smaller and emerging oil marketing companies (OMCs), and ensuring a healthy and competitive market.
The IES noted that the price floor helps to “guarantee supply continuity, particularly during periods of tight margins or market stress,” while also promoting “long-term consumer welfare, rather than short-term price reductions that could lead to market concentration and higher prices in the future.”
Drawing on international examples, the Institute warned that unregulated fuel price wars often end badly for consumers.
“International experiences show that unregulated price wars in fuel markets often lead to monopolisation, supply disruptions, and ultimately higher consumer prices,” it said.
The IES also raised concerns about the idea of selling fuel at lower prices during specific hours, such as overnight.
“The suggestion that an individual OMC could selectively reduce prices during specific hours raises serious regulatory and competition concerns,” the statement said, explaining that fuel retailing does not become cheaper at night.
“Storage, financing, distribution, and inventory risks remain constant,” the Institute added.
The IES said claims of sustainable pricing below the approved floor raise important questions, including whether such prices are below economic cost, whether losses are being used to crowd out competitors, and what would happen to prices if smaller OMCs are forced out of the market.
“These are precisely the market failures the price floor is designed to prevent,” the Institute stated.
It also pointed to public responses from other industry players, including GOIL Ghana, which have challenged StarOil’s claims. The Group CEO of GOIL, the IES noted, argued that some companies calling for lower prices “are unable to compete even at the approved floor price of GH₵9.80 per litre in the current pricing window.”
According to the Institute, this gap between industry realities and public messaging highlights the danger of oversimplifying fuel pricing for social media attention.
The IES further questioned the timing and motive behind calls to remove the price floor.
“A critical question must be asked: would the call for removal of the price floor have arisen if StarOil were not a market leader today?” it asked.
The Institute argued that regulatory protections such as the price floor have historically helped many OMCs survive, grow, and invest in infrastructure, warning against dismantling them after market dominance has been achieved.
In light of the claims made, the IES formally called on the NPA to investigate StarOil’s pricing assertions and cost structures.
The Institute urged the regulator to “examine whether any form of attempted predatory pricing or market distortion is being either contemplated or practised,” assess StarOil’s compliance with pricing regulations, and reaffirm the principles behind the price floor regime.
“Regulation must be evidence-based, transparent, and enforced uniformly, particularly in markets that directly affect national economic stability and household welfare,” the statement said.
The IES called for a more serious and informed national conversation on fuel pricing.
“The debate on fuel pricing must move beyond headline-grabbing statements to a serious engagement with market economics, competition policy, and long-term consumer protection,” it stated, adding that “short-term price reductions that undermine market structure are not pro-consumer in the long run.”
Source: Joynews online
