Fuel price floors cut ahead of July pricing window, raising hopes of lower pump prices

The National Petroleum Authority (NPA) has reduced the price floors for petrol, diesel and liquefied petroleum gas (LPG) ahead of the first pricing window of July, raising expectations of lower pump prices if Oil Marketing Companies (OMCs) pass the reductions on to consumers.

According to an industry notice, the price floor for petrol has been reduced from GH¢13.39 per litre during the second pricing window of June to GH¢12.79 per litre for the first pricing window of July. The GH¢0.60 reduction represents a 4.5 per cent decrease.

Diesel recorded the biggest reduction among the liquid fuels, with its price floor falling from GH¢15.11 per litre to GH¢13.54 per litre. This marks a GH¢1.57 decrease, equivalent to 10.4 per cent.

The price floor for LPG has also been slashed significantly, dropping from GH¢13.23 per kilogram to GH¢10.11 per kilogram. The GH¢3.12 reduction represents a 23.6 per cent decline.

Under the Petroleum Products Pricing Guidelines (PPPG), the published price floors are the minimum prices at which OMCs and LPG Marketing Companies (LPGMCs) are allowed to sell petroleum products during the pricing window. All licensed marketers are required to comply with these minimum prices.

However, the price floors do not include premiums charged by International Oil Trading Companies (IOTCs), operating margins of Bulk Import, Distribution and Export Companies (BIDECs), or the margins set by marketers and dealers. As a result, final pump prices may vary depending on the additional costs applied by individual companies in line with the PPPG.

The latest adjustments come after global crude oil prices eased to around US$70 per barrel, reversing much of the gains recorded during the recent Middle East conflict.

Should OMCs reflect the lower price floors at the pumps, motorists, transport operators, businesses and households are expected to benefit from reduced fuel costs. Lower fuel prices could also help bring down transportation and logistics expenses, ease inflationary pressures and provide additional support for economic activity after recent increases in petroleum prices.

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Prince Antwi

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