The Chamber of Petroleum Consumers (COPEC) is calling on the National Petroleum Authority (NPA) to remove price floors set out in the 2024 petroleum products pricing guidelines.

COPEC says the policy, which prevents Petroleum Service Providers (PSPs) from selling below the regulator-set minimum, is outdated and counterproductive in a deregulated downstream petroleum market.

Speaking to Citi Business News, Executive Secretary of COPEC Duncan Amoah said the price floor does not benefit consumers and argued that scrapping it could allow oil marketing companies (OMCs) to reduce fuel prices further when market conditions permit.

His comments come as consumers are already seeing some relief at the pumps with the start of the second January pricing window.

“The price floor that the NPA sets is outdated and has got to go. In a deregulated market, some of the best outcomes are market competition, and sometimes inventories or modes of payment for products will dictate how much I pay for product “A” as opposed to how much the next person pays for product “A”.

“If I have cash and I can negotiate a fairer price, I can probably pay off instantly and get a lower price, and while somebody going for credit may probably be priced a bit higher. And so, you don’t see why a regulatory body would want to interfere with itself and all of us by imposing price floors and price ceilings. Leave the market to as it were to work towards an efficient pricing mechanism.

“If an OMC can go below the price floor you set, you are only inconveniencing consumers by insisting that it should not sell below this floor. Maybe the authority should begin thinking outside the box and stop this whole arrangement of price floors or price ceilings because it does not work to the benefit of the consumer in any way,” Duncan Amoah said.

Under the current guidelines, the NPA sets and communicates price floors for deregulated products at the start of each pricing window.

PSPs are required to comply and may not sell below these floors. Those found in violation risk fines of up to GHS5,000.

Industry players had raised objections when the price floor was first introduced, arguing that it stifled competition and limited potential savings for consumers.