Energy Consumer Watch Ghana has backed the National Petroleum Authority (NPA) in its decision to maintain the price floor mechanism in fuel pricing.
Oil-marketing company Star Oil had led a campaign for the mechanism to be scrapped in order to further beat down prices of fuel products.
However, Energy Consumer Watch Ghana disagreed.
“The call by Star Oil to scrap this mechanism is not only misguided but poses a real threat to market stability, fair competition, and long-term consumer welfare,” it said in a press statement on Monday, January 19.
It observed that Ghana’s petroleum downstream market operates under a deregulated pricing regime, where pump prices are influenced by global crude oil prices, exchange rate movements, taxes, levies and distribution costs.
“Within this framework, the price floor mechanism serves as a necessary regulatory safeguard to prevent distortions that could undermine the entire value chain.”
Energy Consumer Watch Ghana gave three main functions the mechanism serves.
Among this is the fact that it protects consumers.
“Artificially low fuel prices are often short-lived and unsustainable,” it stated.
“History has shown that sudden price undercutting can result in supply disruptions, fuel shortages, compromised product quality, and abrupt price spikes.
“The price floor promotes price predictability and supply consistency, ensuring that consumers have reliable access to quality fuel across both urban and rural communities.”
It cited Star Oil’s demand as only prioritising narrow corporate interests over the overall Ghanaian interest.
“We therefore strongly condemn this call and urge all stakeholders to support policies that balance competition with sustainability.
“A stable downstream petroleum sector is essential not only for transport and industry but for the everyday Ghanaian whose cost of living is directly tied to fuel prices.”