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Business News of Wednesday, 29 July 2015

Source: B&FT

Goil must help beat down prices – ACEP boss

Goil must use its privileged position as both a Bulk Oil Distribution Company (BDC) and an Oil Marketing Company (OMC) to help beat down prices of petroleum products, Dr. Mohammed Amin Adam, Executive Director of the African Centre for Energy Policy (ACEP), has said.

While government of Ghana policy restricts global giants like Shell and Total to operating as OMCs in a bid to promote strong local BDCs, Goil -- which has a strong government stake (51%), operates at both levels.
The BDCs import ship-loads of petroleum products and sell to the OMCs at a discount.

“Government policy should be to use Goil, which is big, as a check on the market so that Goil prices will force competition into the market and compel the others to also reduce their prices,” Dr. Amin Adam told the B&FT.

A source that pleaded anonymity also indicated to the B&FT that as part of the deregulation process “they [Goil] were supposed to be the ones checking everybody else, but they are not doing that. Goil has about 20% of filling stations and we have so many OMCs. So you can imagine how big they are”.

On Monday when the B&FT checked, Goil prices were marginally lower than those of its major competitors Shell and Total. Goil quoted GH¢3.420 for a litre of petrol (super) and GH¢2.980 for diesel.

Total quoted GH¢3.437 for petrol and GH¢2.991 while Shell sold petrol and diesel at GH¢3.430 and GH¢2.990 per litre respectively.

ACEP has argued that the price reductions the country witnessed a couple of weeks ago should have been much lower.

Per its calculations, the energy policy think-tank said the prices of petroleum products could have reduced by as much as 25% and 27% in some cases, instead of the 11% and 13% decreases that mostly happened.

“If Glory Oil can reduce the price of petrol by 20% and others are doing 13% and 11%, that sums up our case. If they can reduce the price of diesel by 25% while others are doing 18% and 17%, that again makes our case stronger,” Dr. Amin Adam said.

“What is different about Glory Oil when it is charging the same marketers’ margin as Goil and the other OMCs? But Glory Oil cannot influence the market because it is a small company and does not have the volumes.”
In a July 16, 2015 statement to the press, the Energy Economist threatened that “we will not hesitate to seek legal redress to force the market to be fair”.

He reminded the players to bear in mind criminal and civil remedies provided in the National Petroleum Authority Act 691 and the Protection Against unfair Competition Act of 2000.