Fuel price relief could pressure OMCs — COMAC

The Chamber of Oil Marketing Companies (COMAC) has expressed concern over the government’s recent fuel price intervention, cautioning that the policy could place considerable financial pressure on industry players.

Speaking on Citi Eyewitness News on Thursday, April 16, COMAC Chief Executive Officer, Dr. Riverson Oppong, said the announced fuel price reductions come at a cost to oil marketing companies (OMCs), particularly through cuts to key operational margins.

His remarks follow the government’s decision to absorb GH¢2.00 per litre on diesel and GH¢0.36 per litre on petrol as a temporary measure to ease the burden on consumers.

Dr. Oppong explained that the intervention involves reducing margins that are essential to the operations of companies within the sector.

“Government has intervened. This one you cannot take the credit. The government has slashed margins meant for operational expenditure,” he stated.

According to him, the cuts affect critical components such as freight margins under the Price Differential Margin (PDM) and the Unified Petroleum Pricing Fund (UPPF), as well as revenues used by institutions for internally generated funds and fuel marking activities.

He warned that reduced funding for fuel marking could weaken efforts to curb fuel adulteration and diversion, particularly if the National Petroleum Authority lacks adequate reserves to sustain the programme.

Dr. Oppong also highlighted the financial strain on OMCs under the diesel price reduction policy, noting that companies are required to pre-finance part of the cost.

“For instance, if an OMC sells 10 million litres of diesel within four weeks, it would need to pre-finance about GH¢6.3 million while waiting for reimbursement from the UPPF,” he explained.

He cautioned that any delays in reimbursement could create liquidity challenges, affecting the working capital and daily operations of OMCs.

Such risks, he noted, could ultimately affect the stability of the fuel market, as the current arrangement places an indirect burden on oil marketing companies.

“If these funds delay, that brings risk to the market. So indirectly we are burdening the OMC,” he added.

Government has indicated that the intervention will run for one month, during which it will monitor global oil price trends and assess whether further measures will be necessary.