A former member of the Parliamentary Select Committee on Energy, Paul Apreku Twum Barimah, has welcomed the decision by the National Petroleum Authority (NPA) to reduce the floor price of petroleum products.

He said the move signalled a willingness by the NPA Chief Executive Officer, Edudzi Tamakloe, to listen to stakeholder concerns and pursue reforms in the downstream petroleum sector.

Mr Twum Barimah, who is also a former Member of Parliament (MP) for Dormaa East, insisted that the reduction, while commendable, fell short of what was truly needed.

“Reducing the floor price is a step in the right direction, but it does not go far enough. The policy itself must be scrapped entirely to deliver real benefits to Ghanaians,” he argued.

Mr Twum Barimah maintained that the fuel price floor undermined competition and contradicted the very principles of deregulation.

He argued that several Oil Marketing Companies (OMCs) had the capacity to sell fuel at prices lower than the current minimum set by the NPA but were unable to do so because of regulatory constraints.

“I know some oil marketing companies that can sell petrol and diesel below the current rate, but their hands are tied by the NPA’s floor price,” he stated.

According to him, removing the floor price would allow efficient operators to pass cost savings directly to consumers, particularly benefiting low-income households and transport-dependent businesses.

Industry analysts and economic observers had also raised concerns about the broader impact of the policy.

“In a largely homogeneous market like petroleum retail, where fuel quality is standardised, price becomes the primary tool for competition. A mandated price floor, therefore, distorts this natural dynamic,” he added.

Critics 

Referring to complaints he said were from players in the sector, Mr Twum Barimah said, “They say the policy limits competitive pricing among OMCs, creates artificial uniformity in fuel prices, reduces incentives for efficiency and innovation, as well as disadvantages smaller and emerging market players.

“Additionally, during periods of declining global crude oil prices, a price floor may prevent reductions from being passed on to consumers, therefore, effectively insulating the market from global benefits,” he explained.

Mr Twum Barimah further noted that ongoing geopolitical tensions involving the United States, Israel and Iran had created volatility in global oil markets.

In such conditions, he said some OMCs were able to secure fuel through cheaper or alternative supply routes; however, the current pricing regime prevented them from translating these cost advantages into lower pump prices.

Fuel price policy

The NPA introduced the minimum fuel price policy in April 2024 to curb what it described as “unhealthy competition” and to stabilise the downstream sector.

But Mr Twum Barimah argued that the policy had effectively reintroduced price controls into a deregulated market, undermining efficiency, competition, and consumer welfare.

“Deregulation was meant to promote efficiency and competition. A price floor defeats that purpose.

At the heart of the debate is a fundamental policy question: Should Ghana prioritise market stability through regulation, or consumer benefit through full competition?” he queried 

Mr Twum Barimah said the answer was clear that a true deregulation, without price controls, was the only path to lower fuel prices and a more efficient petroleum sector.