Ghana’s downstream petroleum sector counts 245 companies, a figure that Dr Riverson Oppong, CEO of the Chamber of Oil Marketing Companies (COMAC), described as overcrowded. His remarks came amid the government’s decision to extend a diesel subsidy for another two months in response to rising international oil prices.
The subsidy reduces the retail price of diesel by GH¢2 per litre, split equally between a reduction in the D-Levy and a reduction in industry margins. This move aims to cushion consumers from the impact of global price pressures. COMAC projects that diesel prices could reach GH¢19.60 per litre in the next pricing window.
Dr Oppong questioned the sustainability of such government interventions, pointing to the ongoing challenges with deregulation in the sector. “This is an industry where we have pushed for a full price deregulation policy,” he said.
He argued that government influence distorts the market. “What is sometimes, I know, the regulation bit, the external hand that tries to come in, because if I’m a private business, I borrow money to run the business. Who is going to determine what I charge for my good, a ceiling, a cap and all those things because we are a free market economy.”
Parts of the petroleum price build-up have been deregulated, including some margins within the SREF (Self-Regulating Fuel Margin), but government still intervenes in crucial pricing elements. “That is why the government can say it’s giving subsidies,” Dr Oppong explained.
He identified government interference as one of the biggest challenges facing the industry. “I’m also tempted to say that we do have too much government interference, and for me, ever since I took this position, it’s been one of the biggest challenges to deal with.”
The large number of companies in the sector also concerned him. “If you look at the number of players we have in the industry, if anybody today has applied for an oil marketing company’s license, then the person, indeed, for two reasons and I’ll say it unapologetically, that the person either does not understand the business, or is up to something, because what is it that you want to do that the 245 players cannot do?”
The government’s extension of the subsidy comes as international oil prices continue to exert upward pressure on local fuel costs. The price-setting process remains partly regulated, with government involvement in components like the D-Levy and margins, limiting the degree of price freedom private operators have.
This intervention follows earlier subsidy arrangements and reflects ongoing tensions between calls for full deregulation and the government’s efforts to shield consumers from price shocks.
The diesel price rise projection to GH¢19.60 per litre signals that the cost pressures have not eased. As government and industry share the subsidy burden, the debate over how much control private companies have over pricing resists resolution.
Dr Oppong’s comments show that deregulation remains an unfinished process in Ghana’s petroleum sector, even as the market becomes saturated with more companies than some industry leaders consider manageable.
According to Joy Online.
