Formula to regulate petroleum pricing launched
The Ghana Chamber of Bulk Oil Distributors launched its Petroleum Price Indicators in Accra Wednesday. The Price Indicators will give the public access to information on petroleum pricing, and trends.
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This is aimed at promoting transparency in the petroleum downstream sector.
It also seeks to protect the interest of consumers and stakeholders by providing them with information in order to assist them to make informed purchase decisions.
The launch follows the price liberalisation of the petroleum downstream sector, which allows Bulk Oil Distribution Companies (BDCs), importers of refined petroleum products, and Oil Marketing Companies (OMCs) the free hand to price their products.
The price liberalization policy will also result in the cessation of subsidies on fuel prices by the government.
The CBOD Price Indicators include the Ex-Refinery Price Indicator (XPi), Oil Traders Index (OTi) and Fuel Forex Rate (FuFeX30).
The XPi is an estimate of Ex-Refinery prices at which the BDCs may sell their petroleum products to OMCs. It is based on the maximum allowable US dollar indexed price BDCs would have sold petroleum products under the immediate past regulated regime and converted in Ghana Cedis at a referenced foreign exchange rate known as the FuFeX30. It is not a definition of what BDCs must sell at. In the estimation of the CBOD, BDCs are likely to sell at prices lower than the XPi due to competition.
The OTi is an indication of the difference between the average actual traded ex-refinery prices by the BDCs and the XPi represented in percentage terms while the FuFeX30 is a 30-day forward forex rate computed using the covered interest parity model adjusted by the Ghana Sovereign Bond Spread.
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Welcoming move
Speaking at the launch, the Chief Executive Officer of the Ghana Institute of Public Policy Options (GIPPO), Dr Charles Wereko-Brobbey, said the move was welcoming news for consumers.
According to him, the introduction of the pricing formula was a clear indication of the BDCs preparedness to be responsible players within the economy.
“This will provide the opportunity for consumers and the general public to know who is making unreasonable profits, and to assure consumers that they are not taken for a ride,” he said.
He also challenged the media to play a key role in educating and informing the public on the pricing formula and the entire deregulation process.
Monthly report of pricing
The Chief Executive Officer of the CBOD, Mr Senyo Hosi, said the XPi and the OTi will be published every week through the issuance of press releases as part of market reports emanating from the Chamber.
With the introduction of the price liberalisation regime of petroleum products, Mr Hosi said the publishing of the indicators was a major step to ensure fair and competitive pricing for consumers.
For his part, the Executive Director of the Africa Centre for Energy Policy (ACEP), Dr Mohammed Amin Adams, applauded government for the deregulation process, noting that “it is imperative for government to intervene when petroleum prices were difficult for consumers to bear.”
He also called on the National Petroleum Authority (NPA) to create a portal and publish the prices of petroleum products at the ex-pump in order to keep consumers well informed.
In his view, anytime an OMC wants to change its ex-pump price, the NPA should be quickly prompted before that was done.
The President of Imani, Mr Franklin Cudjoe, lauded the initiative of the CBOD and called for similar transparency on the part of OMCs and the private participants in the Utility sector.