Exclusive: Fuel prices to go down from August 1, says NPA
The Oil and Gas department of Ghana will see a decline in price at filling stations at the beginning of August, the NPA has said.
With two days to the new month, consumers will buy gas and petro at a lower price than what they bought in the previous months.
The Head of Economic Regulation at the National Petroleum Authority (NPA), Abass Ibrahim Tasunti, says his outfit is expecting further fuel price reductions at the pumps from August 1 following the reduction in prices of Petrol and Diesel on the World Market.
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Abass Ibrahim Tasunti, who was speaking to Citi Business News on the sidelines of an NPA media interaction in Takoradi assured that the NPA would be monitoring the pumps to see if fuel stations are complying with the pricing formula in changing their fuel prices.
“The fuel price changes are influenced by changes of the price on the world market and the exchange rate in particular. We have seen reductions at the pumps in the past one month purely because the world market prices have dropped. In the next window in which we are going into, we have observed that the price of petrol and diesel have gone down again, and therefore we expect some price reductions at the pumps in the next window which starts from the 1st of August.”
“Regarding the level of reduction, because of the deregulated pricing, the percentage changes will vary from company to company. So what we do as regulator is that we will allow the marketer to make their price changes and as we will monitor to see whether they follow the pricing formula in changing their prices“, he said.
Already, the Chamber for Petroleum Consumers Ghana (COPEC) has hinted of a six percent drop in prices at the pumps in the coming days.
Who is NPA?
The National Petroleum Authority was established by an Act of Parliament (NPA Act 2005, ACT 691) to regulate the petroleum downstream industry in Ghana. As a Regulator, the Authority ensures that the industry remains efficient, profitable, fair, and at the same time, ensuring that consumers receive value for money.
The petroleum downstream sector in Ghana encompasses all activities involved in the importation and refining of crude oil as well as the sale, marketing, and distribution of refined petroleum products in the country.
The various commercial activities of the industry include: importation, exportation, re- exportation, shipment, transportation, processing, refining, storage, distribution, marketing and sale of petroleum products. The industry is one of the key sub-sectors and a major contributor to Ghana’s Gross Domestic Product (GDP).
In June 2015, the Authority successfully implemented the final phase of the deregulation process, which is Price Liberalization. This process involves a full decontrol of prices of petroleum products from Government.
Some of the major oil and gas activities are conducted by international oil companies such as Tullow Ghana, Vitol, Kosmos Energy, ENI, and Aker Energy. Their sub-contractors include Schlumberger, Baker Hughes, Weatherford, Ocean Rig and Technip. The sector has been the subject of investment disputes, such as the one between the Springfield Group and Eni/Vitol.
Upstream activities in the Ghanaian petroleum sector include the procurement and refining of crude oil by the nation’s only petroleum refinery, Tema Oil Refinery (TOR). Downstream activities include the marketing and distribution of petroleum products by Oil Marketing Companies (OMCs) and the pre-mixing of petroleum products for other industrial uses. OMCs operating in Ghana are mainly multinationals; however, the last decade has seen an increase in the establishment of several small and medium-sized local OMCs.
The Ghana National Petroleum Council (GNPC) has the mandate to explore for oil within the nation’s territory. Ghana’s oil and gas prospects are significant. Recent discoveries appear to indicate oil and gas resources stretch across the country’s shoreline from Cape Three Points in the west to Keta in the east. The Volta Basin is also believed to hold oil and gas reserves onshore. The Government of Ghana, through GNPC, seeks to maximize the country’s prospects in the oil and gas sector and extend the country’s continental shelf to increase the sector’s scope.
The prices of petroleum products are regulated by an independent board. The nation consumes significant volumes of petroleum products, which are mainly imported. The petroleum products produced in Ghana are mainly exported.
Opportunities and context for U.S. companies
- Two offshore oil blocks are reserved for the GNPC, which will likely seek partnership with independent oil companies to support exploration and production.
- Ghana’s oil sector needs technical training for local companies.
- Ghana lacks storage facilities for its gas products.
Ghana’s Ministry of Energy, as part of its announcement of investment projects for the next three years, highlighted the following opportunities:
- In addition to providing equipment and services directly to the exploration and production companies, training programs to increase the capacity of Ghanaian firms to provide these services are likely to be highly successful.
- The development of farm-ins or deals where a company, not at present a licensee on a particular licensed area, can acquire an interest from one of the existing licensees.
- Development of infrastructure in the natural gas sector in projects such as the Western Corridor Gas Infrastructure Development Project (WCGIDP).
- Upgrade the gas processing plants’ capacity to 300 million standard cubic feet per day (MMSFD) as part of the Phase Two of WCGIDP.
- Liquid natural gas and liquid petroleum gas-related projects and infrastructure.
- The government has provided land and basic infrastructure such as roads, water, and electricity, but requires private sector participation to develop a facility within the Petroleum Hub Development Authority.
- The government will establish three refineries with a 300,000 Barrels per stream day (BPSD) capacity.
- Tank farms to be constructed for storage of crude and other refined products.
- Construction of two or more jetties with multiple berths.
- Five petrochemical plants to be constructed to produce fertilizer such as ammonia and urea. There is a strong need in the market for the development of down shore production of fertilizer. Ghana remains highly import dependent on imports of fertilizer and has not developed its gas resources for domestic production, although it has announced plans such as these to explore this. See our Market Intelligence on Ghana’s Fertilizer Market.
Sub-sector best prospects
There is a need for oil and gas service firms that can partner with local Ghanaian companies to support the offshore activities of the international oil companies. Domestic Ghanaian companies do not have the ability to provide a broad range of services despite local content requirements. Joint venture firms with foreign partners contributing technology and know-how to a partnership with a reliable local company are highly sought after. In addition to providing equipment and services directly to the exploration and production companies, training programs to improve the capacity of Ghanaian firms to provide these services are likely to be valued.
Local content
The Government of Ghana passed a local content law in 2013 that requires a minimum five percent equity stake in hydrocarbon exploration and production activities.
The upstream oil sector is not a big employer. The industry directly provides an estimated 8,000 jobs for Ghana’s population of 30 million people. Among the government’s targets are for 90 percent local participation in the oil and gas value chain. Analysts view this objective as ambitious due to local firms’ lack of local financial capacity, technical training, and ability to meet international standards. Foreign companies have largely been able to comply with requirements for local personnel via management positions and general staff. Despite these requirements, the value of contracts won by local firms has risen. Further, international oil companies are looking for local partners across the entire upstream value chain, from direct participation, storage, transportation, and haulage to services and maintenance.
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