Fuel consumers in Ghana to pay 14% more; here is why

The Association of Oil Marketing Companies (OMC) has said that its members will increase petroleum prices by a minimum of 14% by the end of this week.

Chairman of the Association of Oil Marketing Companies, Kwaku Agyemang Duah

The Chairman of the Association, Kwaku Agyemang Duah, said the increase is due to some happenings in the first pricing window of June. He said these are the increase of BOST’s margin from 3 to 6 pesewas, and also the about-22%-25% increase in the Bulk Distribution Company (BDC) ex-refinery price.

“There is a lot of stress on OMCs as they are not happy with the continuous decrease in volumes as a result of the increment in prices, as players in the sector lose approximately 6 percent in volume per every one pesewa increase. OMCs will do everything and anything to get the volumes, and so if volumes are going down it is a worry,” Mr Agyemang Duah added.

He further explained that the global cut in production has caused the Bulk Oil Distributing Companies (BDCs)to increase the ex-refinery price because they are not getting enough. Mr Agyemang Duah called on the National Petroleum Authority (NPA) to step in to control BDCs into hiking prices.

“A reasonable decrease happened in the early stages of COVID-19, but that stopped and we have been having some marginal increase. Consumers are going to have a rough ride until the war subsides on the international level.”

His comments come after the NPA’s CEO Hassan Tampuli said the BOST margin increment will not lead to a significant increment in fuel prices.

But Mr Agyeman Duah said even though he may be right, there are other factors in addition to the BOST margin which affect petroleum pricing.

He said that since the outbreak of COVID-19, OMCs have been taking on other costs which are reducing their margins and affecting their bottom lines.

“We have more than 4,000 outlets in this country, so imagine if each one of them is spending even GH?30 every month; that is some huge cost. You have to provide for your employees, and customers will come there as well; this is also another cost. We have asked the OMCs to deal with this cost in their own special way; some may add it to the pricing, but some may absorb it,” Mr. Agyemang Duah said.

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