The petroleum downstream industry has been a contest between the industry players (petroleum service providers) and the consumer. The industry wants profitability while the consumer wants value for money. None of these must occur at the expense of the other.
It is for this reason that the regulator (NPA) was established to innovate and adopt strategies to ensure that the industry remains efficient and profitable but at the same time consumers receive value for money.
This new paradigm was also designed to liberalise the sector and remove the inefficiencies, thereby lifting the government’s “arm” from being the only source of supply and financier of the petroleum product requirements of the country, while paving the way for a free and efficient marketplace.
Poised to be a catalyst for Ghana’s economic transformation and growth, the mandate of the NPA, according to the NPA Act 2005 (Act 691), covers a broad spectrum of tasks. Among others, it is to regulate, oversee and monitor activities in the Petroleum Downstream Industry.
By downstream, we mean all activities involved in the importation and refining of crude oil or the sale, marketing and distribution of refined petroleum products in the country.
The various commercial activities of the downstream industry in respect of petroleum products include: Importation, exportation, re-exportation, shipment, transportation, processing, refining, storage, distribution, marketing and sale of petroleum products.
The downstream petroleum industry has seen dramatic transformation in the past nine years. Key changes include:
Private sector participation in the petroleum downstream industry
The industry, for the first time in several years, has seen an unprecedented proliferation of investment and expansion of petroleum products storage and outlet facilities by the private sector, mostly dominated by a growing number of indigenous Ghanaian companies due to the deregulation of the petroleum downstream industry.
The authority has granted licences to a significant number of new entrants to operate as petroleum service providers (PSPs) in the industry. Consequently there are currently over 700 licensed companies in 20 different categories in the downstream sector.
At the moment, there are 21 oil trading companies and 24 bulk distributing companies that supplement production from the Tema Oil Refinery through the importation of finished petroleum products to meet the demand deficit. More than 500 transporters have been licensed to supply and transport petroleum products in the country.
Others include 81 oil marketing companies, 42 LPG marketing companies (LPGMCs), 22 bunkering companies, calibration companies, which used to be three before the establishment of the NPA but are now five; three lubricant manufacturing; three lubricant blending and marketing, nine petroleum products export companies, seven bulk oil storage depots, a new refinery, a mooring company, an emulsified fuels production company, and a stratification company, among others.
The involvement of the private sector in the importation of crude oil/ refined petroleum products has minimised the Government’s involvement in procuring or financing the petroleum product requirements of the country, thereby making more resources available for other developmental projects and programmes.
This has also resulted in the reliable supply of crude oil or petroleum products.
Unified Petroleum Pricing Fund (UPPF) Scheme
The NPA has put in place a UPPF scheme which ensures that there is regular supply of petroleum products to all parts of the country, irrespective of the geographical location, at the same price.
The UPPF sees to it that petroleum products are efficiently transported across the country in a manner that is simple, effective and inexpensive to operate administratively.
Protecting the interests of consumers
As a regulator, we are concerned about the growing number of calls by consumers with regard to the poor quality of fuel and inaccurate quantity of fuel dispensed at the pumps at various stations.
In order to ensure sanity in the sale and marketing of products in the petroleum downstream sector, the NPA introduced the Petroleum Product Marking Scheme (PPMS) to ensure that the quality of products is devoid of adulteration and meets the required specification as the one loaded from the depots to retail outlets. Offenders are duly sanctioned in accordance with LI 2187.
Additionally, the quantity of products offered for sale at the pump is assessed to ensure that the customer is not cheated. For this purpose, the NPA, in collaboration with the Ghana Standards Authority, developed and introduced the 10-litre measuring can to guide consumers at retail outlets and to give consumers the ability to verify the accuracy of dispensing pumps when they are in doubt.
Enhancing the performance of PSPs
Our focus at the NPA is to ensure that all stakeholders pitch in to further improve standards. The authority, in collaboration with other stakeholders has provided comprehensive guidelines and standards to guide the operations of various PSPs. This is aimed at improving the efficiency, compliance and safety of the industry.
Furthermore, the authority embarks on several nationwide inspections throughout the year to ensure that PSPs are operating according to the stipulated guidelines.
In conclusion, imagine a game of football where there is no referee, no rules and no standards; it becomes a ‘free-for-all’ contest where the strongest takes advantage of the weak; or better still, it can be linked to the jungle’s “survival of the fittest”.
Therefore, it is worthy to note that the role the NPA plays in the petroleum downstream industry goes beyond just the pricing of petroleum products, contrary to comments by some think tanks and social commentators.
NPA’s operations include other management functions such as planning, research, monitoring and the setting of standards in the downstream petroleum industry.
Its existence and operations are vital in sustaining the development of the petroleum downstream industry in Ghana.
OIL MARKET NEWS (WEEK 36): WEEK ENDED SEPTEMBER 5, 2014
Brent crude oil trades in a range of $99-$101 per barrel
Brent crude oil trades in a range of $99-$101 per barrel.
The average GHS/US Dollar exchange rate depreciates by 1.24% compared to the previous week.
Libyan parliament reappoints former Prime Minister.
Ghana’s stock of diesel increases; petrol declines compared to the previous week’s stock.
U.S total commercial petroleum inventories increase by 1.5 million barrels the previous week.
Average Dated Brent price for the week (published by Platts) increased by $0.43 to $100.66 per barrel from the previous week's average of $101.10 a barrel, indicating 0.43% decline.
Brent crude oil fell marginally as Chinese and U.S. data pointed to slower-than-expected growth in the world's top oil consumers. Prospect of slowing oil demand growth in Europe, a strong dollar and ample supplies pushed prices down.
"The Chinese data, with imports showing disappointing results, indicates the domestic economy remains quite weak," said Victor Shum, senior partner at oil consultancy Purvin & Gertz. Oil prices have been in steady decline since the end of June as concerns faded over supply disruptions from Iraq, Libya and Russia. Continued supply from key producing regions and tepid demand has left global markets well stocked.
Free on board (FOB) prices of Petrol increased by $5.99 to $970.30/MT from the previous week's average of $964.31, indicating 0.62% rise; Diesel decreased by $5.61 to $856.95/MT from the previous week’s average of $862.56, indicating 0.65% decline; and LPG decreased marginally by $0.75 to $754.25/MT from the previous week’s average of $754.25, indicating 0.10% decline, during the period under review.
The average GHS/US Dollar exchange rate depreciates by 1.24% compared to the previous week
The GHS/US Dollar exchange rate weakened for the second consecutive week after stabilizing the previous three weeks.
The depreciation of the Ghana cedi against the USD, increased the impact of the exchange rate on the ex-pump price of petroleum products.
The GHS/US Dollar exchange rate for the period 1st September 2014 to 5th September 2014 was 3.1736 compared to 3.1346 during the previous week (1.24% depreciation).
The GHS equivalent of FOB prices for petrol, diesel and LPG increased by 1.87%, 0.59% and 1.14% respectively, during the period under review.
Libyan parliament reappoints former Prime Minister
Libya's parliament reappointed Prime Minister Abdullah al-Thinni as the government lost control of ministries in the capital where armed groups have taken over and a separate parliament has claimed legitimacy.
In another sign of the oil producer sliding deeper into anarchy, Islamist militants launched a new attempt to seize Benghazi's civilian and military airport from army forces allied to a renegade general. At least 13 soldiers from Haftar's forces were killed and 45 wounded, medics said.
The reappointment of Thinni, a former defence minister and career soldier who has been prime minister since March, sets him the challenge of reasserting government control over a country where many fear a descent into full-scale civil war.
Parliamentary spokesman Faraj Hashem said 64 of the 106 representatives present had voted for Thinni and the house had instructed him "to form a crisis government within a period of time not exceeding two weeks."
Ghana’s stock of diesel increases; petrol declines compared to the previous week’s stock
Ghana’s stock of Diesel and Petrol to last 1.5 and 0.9 weeks respectively (as at September 1, 2014).
Diesel’s stock of 1.5 weeks compare favorably to last week’s stock to last of 1.4 weeks, while Petrol’s stock of 0.9 weeks compares unfavorably to last week’s stock of 2.0 weeks.
According to the import schedule, Diesel of about 46.7 million litres was expected for delivery, while Petrol of about 87.2 million litres was expected for delivery to add to existing stockpiles.
LPG of about 4.0 million kilogrammes was also expected for delivery by close of the week (September 6, 2014). The CDU and RFCC remain shut down for planned mini maintenance and lack of feed.
The statistical arm of the U.S. Department of Energy, the Energy Information Administration (EIA), reported in its Weekly Petroleum Status Report for August 29, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.9 million barrels to 359.6 million barrels while gasoline stockpiles decreased by 2.3 million barrels to 212.6 million barrels.
Inventories of distillate fuel, a category including heating oil and diesel, increased by 0.6 million barrels to 126.0 million barrels over the same period. Total commercial petroleum inventories increased by 1.5 million barrels last week.
Demand and Supply
U.S total commercial petroleum inventories increase by 1.5 million barrels the previous week.
The EIA in its Weekly Petroleum Status report for August 29, 2014 reported that, U.S. crude oil imports averaged over 7.7 million barrels per day last week, up by 42,000 barrels per day from the previous week.
Over the last four weeks, crude oil imports averaged over 7.7 million barrels per day, 5.8% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 801,000 barrels per day. Distillate fuel imports averaged 153,000 barrels per day last week.
Total products supplied over the last four-week period averaged over 19.7 million barrels per day, up by 2.7% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.1 million barrels per day, down by 0.7% from the same period last year.
Distillate fuel product supplied averaged 3.9 million barrels per day over the last four weeks, up by 5.1% from the same period last year. Jet fuel product supplied is up 1.3% compared to the same four-week period last year.
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