Ghana Asks Nigeria to Fully Deregulate Price of Petrol, Ban Dirty Fuels
Ejiofor Alike
Ghana has called on the federal government to deregulate the price of petrol, stressing that as the largest market for products in West Africa, any failure on the part of Nigeria to implement full deregulation would distort the envisaged sub-regional market.
Speaking yesterday in Lagos at the 11th Oil Trading and Logistics (OTL) Expo, the Ghana’s Deputy Minister of Energy, Dr. Mohammed Amin Adam, also stressed the need for African countries to move to cleaner petrol, saying that Ghana, Nigeria, Kenya and a host of other African countries had specified Sulphur levels for diesel imported at 50 parts per million (ppm) maximum, with a view to meeting the specification of 10 ppm in the medium term.
He said Ghana implemented full deregulation in July 2015 and has also implemented the 50 ppm specification for petrol, adding that a number of other African countries, pressured by the increasing subsidy payments, have put mechanisms in place to deregulate the industry and relieve government of the burden of unsustainable subsidy payments.
Amin added that for some countries, the governments had the opportunity to introduce market based policies such as price deregulation and reduction or removal of price subsidies.
He noted that following the sustained lower oil price environment of the last three years, there has emerged what he described as “Petro-democracy” in which citizens demand for greater accountability from their Governments and players in the petroleum industry. “In some countries, the demand for domestic prices to follow a symmetrical trend with international prices led to downward adjustments in prices. This involves allowing the forces of demand and supply to dictate prices with a view to fully recover the cost of investments made by service providers,” he said.
According to him, Nigeria, for example, has deregulated the pricing of diesel, while steps are far advanced for gasoline prices to be deregulated.
Anin, who spoke alongside the Chief Executive Officer of Ghana’s National Petroleum Authority (NPA), added that his country has, largely, fully deregulated the industry with the exception of Residual Fuel Oil (RFO) and Premix fuel, which are still being regulated by government.
He also added that Kenya and South Africa have deregulated their pricing regimes, which has catapulted the industry to that of a market-driven one.
“This bold decision to fully liberalise petroleum product prices has energized the sector, resulting in competitive pricing, better service delivery and improving the enabling environment for private sector-led investments in the sector. I wish to call on the Nigerian Government to make efforts at reaching full price deregulation given that it is the largest market for products; and any failure on its part can be very distortionary on the subregional market we all envisage,” he explained.
Amin also called on the West African countries to make efforts to sustain the gains from deregulation policies by creating financial buffers and increasing strategic reserves to stabilise the markets when the fundamentals change in favour of higher prices.
“At the same time, we must put in place policies that punish domestic cartelisation and other forms of anti-competitive behaviours. This will make deregulation policies become effective instruments for increasing public confidence in our free markets, and prevent us from returning to the days of subsidies and under-recoveries, which have had very negative long-term effects on many economies,” he added.
He also argued on the need for Africa countries to transit to low Sulphur fuel, saying this drive to move from dirty fuels to cleaner fuels has resulted in most countries opting to tighten the specifications for petrol and diesel.
“In line with ARA’s AFRI 4 specification, Ghana, Nigeria, Kenya and a host of other African countries have specified Sulphur levels for diesel imported at 50 ppm maximum, with a view to meeting the specification of 10ppm in the medium term. The clarion call for African countries to move to cleaner fuels presents an opportunity for investments in domestic refineries to meet national specifications, allowing the downstream to be supportive of the development goals of African economies,” he said.
Also speaking at the conference, the Chairman of OTL Advisory Board and Chief Executive Officer of Petrowest Energy, Mr. Reginald Stanley said the downstream sector in Africa had been plagued by plethora of challenges.