NPA should investigate OMCs over fuel price reduction strategy- CUTS Ghana

CUTS Ghana, a research and advocacy policy think tank, has stated its disappointment at the decision by the Association of Oil Marketing Companies’ (AOMCs) to set a percentage cap and defer the window for reducing fuel prices at the pump.

According to the think tank, the decision violates Section 44 of the National Petroleum Authority (NPA) Act on petroleum downstream industry regulation, (Act 691) of 2005.

Therefore, the think tank, has called on the NPA to investigate the OMCs over their failure to reduce fuel prices drastically to reflect reduction in international prices.

“Though members of the association can meet to decide or agree on some issues, it is illegal for the association to decide on any matters related to pricing. We therefore call on the NPA to use the existing provisions in the NPA Act (Sections 43, 44 and 45) to investigate anti-competitive violations in the petroleum downstream sector.”

A statement issued in Accra and signed and issued in Accra
yesterday by the Country Director, Mr Appiah Kusi Adomako, said with the
emergence of price deregulation and the appreciation of the Cedi to the United
States Dollar, it is expected that consumers will feel the impact of the reduction
in the crude oil prices.

However, he said, consumers of petroleum products have not
seen any appreciable decrease in the prices at the pump even though key price
determinants suggests so, a situation the think tank described as worrying.

NPA must intervene

Consequently, CUTS has urged the NPA to intervene to ensure
that industry players adhere to the pricing variables, and to protect the
interest of petroleum consumers.

“Price fixing is an agreement, which could be written,
verbal, or inferred from conduct among competitors that raises, lowers, or
stabilizes prices or competitive terms.

“The concerted effort by the AOMCs to agree on an average percentage price reduction and the deferring the time for such a reduction constitutes a price fixing, which is an offense under sub-section three of Section 44 of the NPA’s Act,” it added.

Competition among the OMCs

“The essence of the full price deregulation is to bring
about competition and increase efficiency in the market and thereby increasing
consumer welfare.

Therefore, the statement adds that it is much of a wonder
why the OMCs in the country are very slow in reviewing prices downwards but
very swift when it comes to upward review of prices.

“The statement by the AOMCs that consumers should not expect
a drastic reduction of the commodity this week in itself is a clear indication
that the Association is having a horizontal and concerted action on pricing,
which violates the essence of free market and competition rules as contained in
the NPA Act.

It also urged Parliament to fast track the passage of the
Competition and Fair-Trade Practice Bill into law to ensure smooth take off of
the second phase of the negotiations of African Continental Free Trade Area
(AfCFTA).

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