The Chamber of Petroleum Consumers (COPEC) has reiterated the need for further reduction in fuel prices at the pumps.
The comments, follow the Chamber of Bulk Oil Distributors’ (CBOD) appeal to petroleum consumers to be circumspect in their demand for decreases in fuel prices at the pumps.
Executive Director of the Chamber of Petroleum CEO of CBOD, Senyo Hosi
Consumers, Duncan Amoah.
Brent crude, which was selling for about 66 dollars on January 2, 2020, is now going for about 29 dollars as at March 20.
A price war between Saudi Arabia and Russia, led to the drop in crude oil prices on March 9, 2020, the lowest in four years.
On the local front, however, the prices of petrol and diesel at the pumps, have only dropped by an average of about 5 percent.
In justifying the lack of an appreciable reduction in prices, the Chief Executive Officer(CEO) of CBOD, Senyo Hosi, at a press briefing, explained that Oil Marketing Companies (OMCs) have been taking a hit for a long time, and would need a little space to recover their losses.
But the Executive Director of the Chamber of Petroleum Consumers, Duncan Amoah, says the OMCs, are being unfair to consumers.
“Sometimes the OMCs under-recover because they eat into their own margins. So it might not necessarily mean they are making losses, but rather they are making reduced profits…because if you have a margin of 67 and you drop to 40, it doesn’t mean you are not making anything, you’ve lost 27 which would have been part of your profit. What is not fair to consumers is for you to say that the fact that you’ve dropped that 27, you will now sell at a high price to recoup the 27 you lost in the past.”
Duncan Amoah, further urged the Chamber of Bulk Oil Distributors and the Oil Marketing companies to renegotiate their business terms with banks in the country, in order to pass on the reduction in oil prices to consumers.
“Maybe as a group you should be able to renegotiate with the banks because of the high volume of business you do with them because if they are making so much and you are making so little; eventually you can’t pass on any reliefs to the consumers.”
The CBOD,had asking petroleum consumers across the country to be measured in their demand for reduction in fuel prices at the pumps.
According to Senyo Hosi, there are several factors that go into the calculation of fuel prices before the ex-pump price is reached.
“The OMCs have been selling below market price, which will mean either they or the Bulk Oil Distribution Companies (BDC’s) are giving away a good part of their margin and taking a hi. The truth of the matter is that significantly most Oil Marketing Companies (OMC’s) benchmark their prices to the GOIL prices,” Mr. Hosi said this at press briefing in Accra.
“That is the public truth and I think we have said it in our industry report before that there are several factors that go into the calculation of fuel prices before the ex-pump price is reached. That is why it is easy for you to see Shell, Total and GOIL often around the same price and you find the other ones actually going lower than all these people,” he argued.
Earlier on March 9, oil prices plummeting around 30 percent after Saudi Arabia and Russia slashed its official selling prices and set plans for a dramatic increase in crude production next month, starting a price war even as spread of the coronavirus erodes global demand growth.
Following that, COPEC believes consumers in Ghana should witness between 10-32 percent reductions in fuel prices even though the Oil Marketing Companies (OMCs) have reduced fuel prices by 5 percent.
Recently, GOIL Ghana integrated its operation to reduce its price below the market level to attract customers, forcing other major oil companies to lower their prices to be competitive.
Mr Hosi, however, says that OMC’s have been taking a hit for a long time, and would need a little space to recover their losses, adding that the situation has resulted in OMCs selling below the price estimation of the National Petroleum Authority and the Chamber of Bulk Oil Distributors.