Chief Executive Officer of Star Oil Ghana, Philip Tieku, has exposed how widespread tax evasion and fuel product diversion are distorting prices in Ghana’s petroleum downstream sector.
He said the illegal activities have created unfair competition and raised questions about the effectiveness of current regulatory measures, including the introduction of a price floor.
“When the price floor was instituted, I openly wrote against it,” Mr Tieku said on JoyNews’ PM Express Business Edition on Thursday, November 6.
“I don’t really believe that in a competitive market there’s any need for a price floor or even a price ceiling. You want players to be able to operate their businesses efficiently.”
He said the decision to impose a price floor could be interpreted as “an admission of poor governance systems in our industry and the fact that some players need to be protected, or they make bad decisions around their pricing.”
The Star Oil boss argued that market forces should determine prices rather than regulatory restrictions, insisting that competition drives efficiency.
However, he admitted that the price floor may be relevant only in situations involving tax evasion and product diversion.
“About a week ago, you saw a GRA news article where some exported products were diverted or were going to be diverted and sold in some of our stations locally,” he said.
“When people avoid taxes on the product, they are able to or they want to sell it very quickly.”
He explained that fuel taxes alone amount to about ¢4.27 per litre of gasoline, creating room for illicit gains when products meant for export are sold locally without taxes.
“If you have somebody diverting a product meant for export into Burkina Faso and selling it at the filling station in Ghana, already they have a ¢4.27 margin to play with. Such a person can drop the price to ridiculous levels, and that can have its own effects,” he revealed.
Mr. Tieku said that in such cases, the price floor may serve as a temporary check against illegal underpricing, but beyond that, it offers no real value.
“That’s the only area I see the price floor as playing some role if such a person should get their hands on those products. They may not be able to sell lower than the price floor, but otherwise, I really don’t see the benefit of the price floor,” he maintained.
Responding to the regulator’s argument that the policy was necessary to protect smaller Oil Marketing Companies (OMCs) from collapse, Mr Tieku disagreed sharply.
“If the regulator argues that way, then it’s an admission that a lot of players in the industry don’t know their business or are not able to analyse their business in terms of costs, revenues, and profitability,” he said.
He compared the situation to the banking sector, saying, “The Bank of Ghana is not going to license clueless banks. It’s going to make sure that these are banks that have good governance controls.”
Mr. Tieku stressed that strong corporate governance and sound financial management should guide the sector, not artificial pricing restrictions.
“At the time the price floor was introduced, nobody could say that Star Oil was not profitable. We’re profitable. We’re not selling at a loss,” he declared.
He said Ghana’s petroleum downstream market must be cleaned of distortions caused by tax evasion, smuggling, and poor regulation if fair competition and consumer protection are to be achieved.
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