Energy Analyst and Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE), Benjamin Nsiah has backed calls by some oil marketing companies for the removal of the floor price policy.
The policy was introduced by the National Petroleum Authority to set price ceiling for downstream oil marketing companies as a protective measure.
In recent times, some Chief Executives of OMCs have been debating the usefulness of the policy as fuel prices decline in the local market.
Reacting to the development, Benjamin Nsiah said the policy is against the main law establishing the NPA.
“Imposing price floors on fuel disrupts natural market competition.
While intended to protect big OMCs due to their business models and overhead costs, it removes the incentive for companies to compete through service, location, or goodwill.
Ultimately, it penalizes efficient firms, reduces consumer choice, and can lead to market inefficiencies and higher average prices for all”.
He added “When you look at the Act establishing the NPA itself which is meant to protect consumers and regulate the industry, the floor price policy is a deviation”.
The floor price policy aimed at ensuring fair competition at a controlled price ceiling for sector players without shortchanging the industry.
According to Benjamin Nsiah, the regulator must allow consumers to enjoy the falling price that is currently being experienced rather than using stringent measures to prevent prices from dropping.
He believes a sanction regime will be more effective for the players.
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