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ACEP Raises Concerns Over Ghana's Downstream Petroleum Sector.

 


Story by, Nsor Paul Mensah 

The Africa Center for Energy Policy (ACEP) has expressed concerns over the significant increases in regulatory margins and lack of transparency in Ghana's downstream petroleum sector. 

At a press conference held on Tuesday, 16th January, 2025 at its office in Accra, Kodzo Yaotse, ACEP's Lead for Petroleum and Conventional Energy, highlighted the substantial increases in regulatory margins controlled by the National Petroleum Authority (NPA) between 2018 and 2024.

According to him, the primary distribution margin (PDM) has increased by 247%, the full market margin by 350%, and the unified petroleum price fund (UPF) by 429%.

These margins, he reiterated imposed on consumers, have been criticized for acting as an "unjust tax" without sound economic justification.

Meanwhile the original intent of price deregulation in 2015 was to allow market players to handle distribution while the NPA focused on quality control. 

However, "the NPA has transformed into a "bloated procurement powerhouse," imposing unnecessary costs on consumers", he stressed.

Inefficiencies in the System

One glaring example of inefficiency is the cost of transporting petroleum products from depots to retail outlets. It costs 116 pesewas to transport a liter of product, while the average cost of freight and insurance from Europe to Ghana is only 5 cents per liter.

The PDM, charged at 26 pesewas per liter, is particularly concerning as it is levied regardless of whether the product passes through Bost facilities or not. More than 50% of products distributed in Ghana are moved outside of Bost facilities, raising questions about the justification for this margin.

Lack of Transparency and Accountability

The Unified Petroleum Price Fund (UPF) has also come under scrutiny. The necessity of maintaining price parity is questioned, as prices are often lower in remote regions than in major cities. The lack of transparency and accountability for the nearly 5 billion Ghanaian cedis in annual revenue accrued from the UPF levy is a major issue.

Calls for Investigation and Reform

ACEP has called for a thorough investigation into the justification for the significant increases in regulatory margins, the effectiveness of the fuel marking scheme, the continued necessity of the Bust margin, and the utilization of the price stabilization and recovery levy funds.

The organization emphasizes the need for transparency and accountability in the management of Ghana's downstream petroleum sector to ensure that consumers are not burdened by unjustified taxes and levies.

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