The Institute for Energy Security (IES) has defended the price floor regime of the National Petroleum Authority (NPA), cautioning that recent public calls for its removal could undermine competition, destabilise the petroleum downstream market and ultimately harm consumers.
In a statement reacting to comments attributed to the Chief Executive Officer of StarOil Ghana, the IES said claims that fuel prices could be reduced to as low as GHC9.50 per litre if the price floor were scrapped were misleading and failed to reflect the economic realities of fuel retailing.
“The NPA price floor policy is a critical safeguard for fair competition and a long-term deregulated market,” the IES stated, adding that while public debate on fuel prices was welcome, it must be “grounded in sound market principles, regulatory context, and the long-term interests of Ghana’s petroleum sector”.
The Institute noted that the remarks by StarOil’s CEO had generated widespread public discussion, particularly on social media, with many consumers calling for the immediate removal of the price floor to drive prices down.
However, the IES stressed that Ghana’s petroleum downstream market was “capital-intensive, high-risk, and highly exposed to global price volatility and exchange rate fluctuations”, making simplistic comparisons and promises of sharp price cuts potentially dangerous.
According to the IES, the price floor was never intended as a price-fixing mechanism.
“The NPA price floor was introduced as a competition-stabilising mechanism, not as a price-fixing tool,” the Institute said.
It explained that the policy served several critical functions, including preventing predatory pricing by dominant firms, protecting small and emerging Oil Marketing Companies (OMCs), preserving healthy competition and ensuring continuity of fuel supply, especially during periods of market stress.
The Institute warned that short-term price reductions, if driven by below-cost selling, could lead to long-term market concentration and higher prices.
“International experiences show that unregulated price wars in fuel markets often lead to monopolisation, supply disruptions, and ultimately higher consumer prices,” it noted.
The IES also raised concerns about the suggestion that fuel prices could be selectively reduced during off-peak hours.
“The suggestion that an individual OMC could selectively reduce prices during specific hours, such as 10 pm to 4 am, raises serious regulatory and competition concerns,” it noted.
It rejected comparisons between fuel retailing and digital services, noting that “storage, financing, distribution, and inventory risks remain constant”, regardless of the time of day.
If an OMC claimed it could sustainably sell below the regulatory floor, the Institute said several critical questions must be answered.
“Are such prices below economic cost? Are losses being cross-subsidised to crowd out competitors? Would smaller OMCs survive such a strategy? What happens to prices once competitors exit the market?” the IES asked, adding that “these are precisely the market failures the price floor is designed to prevent”.
The Institute also pointed to dissent within the industry itself, noting that some players had openly challenged StarOil’s assertions.
“It is noteworthy that several industry players, including GOIL Ghana, have publicly challenged StarOil’s claims,” the IES said, adding that GOIL’s Group Chief Executive Officer had observed that some companies advocating for lower prices are unable to compete even at the approved floor price of GHS 9.80 per litre in the current pricing window.
The Institute warned that the growing gap between industry realities and public narratives risked oversimplifying fuel pricing dynamics for social media appeal.
A key issue, the IES said, was whether the current agitation would exist if StarOil were not a market leader.
“A critical question must be asked: would the call for removal of the price floor have arisen if StarOil were not a market leader today?” it said.
It noted that regulatory protections such as the price floor had historically enabled many OMCs to survive intense competition, build scale and invest in infrastructure.
“To advocate for dismantling these protections after achieving dominance raises concerns about regulatory opportunism rather than genuine consumer advocacy,” the Institute cautioned.
Given the seriousness of the public claims, the IES has formally called on the NPA to investigate the matter.
It urged the regulator to investigate StarOil’s pricing claims and cost structures, examine any potential predatory pricing practices, assess compliance with existing regulations, and “reaffirm the principles underpinning the price floor regime in the interest of market stability”.
The Institute emphasised that regulation in the petroleum sector must be “evidence-based, transparent, and enforced uniformly”, given its direct impact on national economic stability and household welfare.
“The debate on fuel pricing must move beyond headline-grabbing statements to a serious engagement with market economics, competition policy, and long-term consumer protection.”.
According to the IES, short-term price reductions that undermine market structure are not pro-consumer in the long run.
The Institute reaffirmed its commitment to supporting policies that promote fair competition, energy security and sustainable consumer welfare in Ghana’s petroleum downstream sector.
