Parliament has passed the National Petroleum Authority (Amendment) Bill, 2015 into law.
The coming into effect of this law means that the government has fully adopted a full deregulation policy which would halt its continuous intervention in the pricing of petroleum products in the country.
The new law would therefore ensure that the full cost recovery and uniformity in pricing of petroleum products would be determined by the market and competition.
Under the previous law which has been amended, the National Petroleum Authority had the mandate to price petroleum products in the country.
The Minister for Petroleum, Mr Emmanuel Armah-Kofi Buah, speaking to the media after the passage of the bill, said it was a very important step in the downstream petroleum industry.
He said the NPA Act which was passed in 2005 introduced private participation in the downstream petroleum business which allowed Oil Marketing Companies and other private companies to import petroleum products which was been priced by government.
“However, over the years, we saw some of the challenges that government was facing in terms of subsidies and forex losses and we therefore got to a point where government had to completely conclude this journey by liberalizing the prices and making sure that it is the market and competition that determined prices,” he said.
“With the passage of the amendment, basically, we have reached that journey but we all have to work together to ensure that the price deregulated environment work. It only works when the market truly determines the prices,” he added.
Reason for the amendment
For the purpose of facilitating the implementation of the deregulation policy, the NPA Act, 2005 (Act 691) was passed in 2005 to establish the NPA to provide the framework for the regulation of the petroleum deregulated market.
Amongst the key mandate of the NPA under the Act was to determine prices of petroleum products through the application of the prescribed petroleum formula.
However, with the commencement of the implementation of the price liberalization under the deregulation policy, the NPA has ceased to determine the indicative maximum ex-refinery and ex-pump prices in the country.
The new dispensation has therefore confined the role of the NPA to the monitoring of the application of the formula.
It was therefore necessary to amend the NPA Act, 2005 (Act 691) to align it with the full price liberalization regime and to also redefine the role of the NPA in that regard.
Mr Armah-Kofi Buah said the NPA’s role was now to focus on ensuring that people were obeying the rules and playing by the rules in the industry.
He mentioned that the NPA must strengthen its capacity to make sure that product quality was at its best and also ensure that there was transparency and fair competition in the market.
“The issue of pricing will now be determined by keen competition and I urge political parties to take out politics from the business of buying and selling of petroleum products,” he explained.
He said government would, however, continue to look at areas like premix and other products that were important for fishing and agricultural purposes and intervene.
Source: Daily Graphic