While the Ghana Chamber of Bulk Oil Distributors (CBOB) has given an indicative price reduction of 26.26 per cent on premium, gas oil, liquefied petroleum gas (LPG) and kerosene, the oil marketing companies have reduced the prices by between 11 and 15 per cent.
The CBOD yesterday released an outlook of indicative prices for petroleum products for the next one week to the media, using world market prices for finished products, but the Association of Oil Marketing Companies (AOMCs) says such projection is not achievable.
It is impossible
Some consumers and analysts are of the view that the prices should have dropped further following the rapid appreciation of the cedi and the downward surge in crude oil prices on the world market.
But the Chief Executive Officer (CEO) of the AOMCs, Mr Kwaku Agyemang-Duah, told the Daily Graphic that the CBOD indicative figures were impossible for implementation by his association.
“Petroleum products are laden with so many taxes that it is virtually impossible to sell them at 100 per cent less even if world market prices dropped by 100 per cent,” he noted.
According to him, returns for his members were far less than the taxes they paid on products.
Mr Agyemang-Duah disclosed that although the CBOD was the mouthpiece of bulk oil distributors (BDCs), importers of finished products, the BDCs themselves quoted varied prices to OMCs, stressing, “The CBOD is quoting a different figure from its members.”
“A lot of factors go into the pricing of petroleum products and for that reason it is not possible for prices to drop further in this pricing window.
“We pay 17 per cent tax on our products, aside from the other operational costs we are faced with on a daily basis,” he explained.
He said the CBOD was working within its remit and acting based on world projections, but noted that BDCs themselves were selling at varied rates, aside from the taxes and other costs the OMCs were grappling with.
Giving due credit to the CBOD for its projections, Mr Agyemang-Duah said his members were using the formula provided by the National Petroleum Authority (NPA).
“We are working within the formula. We are committed to the deregulation of the petroleum downstream industry,” he said.
Touching on the competition which had arisen among OMCs as a result of the full deregulation of the petroleum downstream sector, he noted that “if all prices remain the same at all pumps, that means there is collusion”.
“There is no collusion. We are not a cartel because we are showing and will continue to show good faith in the price liberalisation of the petroleum downstream sector,” he said.
CBOD market update
The CBOD market update is a public interest service rendered by the CBOD to keep the public and consumers abreast of trends and key events within the petroleum downstream industry.
Under the new regime, the window review of products will be published on a weekly basis.
The first projection takes effect from July 16 to 23, 2015.
A document released by the CBOD said, “The June 27 to July 11, 2015 pricing window (used to set prices for sales between the 16th and 31st July) saw a 5.11%, 10.86% and 5.84% drop in the world market price of gasoil, LPG and kerosene, respectively. Gasoline inched up by 2.54%.”
CBOD petroleum price indicators
Meanwhile, the CBOD has launched its petroleum price indicators (PPIs) to give the public access to information on petroleum pricing and trends.
According to its Chief Executive Officer (CEO), Mr Senyo Hosi, the move was aimed at promoting transparency in the petroleum downstream sector.
It also sought to protect the interest of consumers and stakeholders by providing them with information in order to assist them to make informed purchase decisions.
The launch followed the price liberalisation of the petroleum downstream sector, which allows BDCs, importers of refined petroleum products and OMCs the free hand to price their products.
The price liberalisation policy, which is being championed by the government, will also result in the cessation of subsidies on fuel prices.
The CBOD PPIs include the Ex-Refinery Price Indicator (XPi), Oil Traders Index (OTi) and Fuel Forex Rate (FuFeX30).
The XPi is an estimate of ex-refinery prices at which the BDCs may sell their petroleum products to OMCs. It is based on the maximum allowable US dollar indexed price the BDCs would have sold petroleum products under the immediate past regulated regime and converted in Ghana cedis at a referenced foreign exchange rate known as the FuFeX30.
It is not a definition of what the BDCs must sell at. In the estimation of the CBOD, BDCs are likely to sell at prices lower than the ex-refinery price due to competition.
The OTi is an indication of the difference between the average actual traded ex-refinery prices by the BDCs and the ex-refinery price represented in percentage terms, while the FuFeX30 is a 30-day forward forex rate computed using the covered interest parity model adjusted by the Ghana Sovereign Bond Spread.