The government of Ghana has directed the Tema Oil Refinery (TOR) and Sentuo Oil Refinery to continue supplying Oil Marketing Companies (OMCs) at their previous prices. This move is expected to provide some relief to consumers amid pressure on fuel prices. It comes in addition to the government’s existing GH¢2 diesel subsidy. The directive aims to maintain stability in the fuel market.
According to Dr. Riverson Oppong, Chief Executive of the Chamber of Oil Marketing Companies (COMAC), the refineries' decision to maintain their prices could prevent an immediate increase at the pumps. He explained that the Supplier Reference Exchange Rate (SREF) is a key factor in determining pump prices. The SREF plays a significant role in the cost-reflective pricing model used in Ghana's fuel industry.
Dr. Oppong further explained that fuel pricing in Ghana follows a cost-reflective model, meaning changes in the various components of the industry’s cost structure ultimately affect pump prices. The cost-reflective pricing model takes into account taxes, levies, and other costs. OMCs' margins are determined separately, adding to the final pump prices.
The government’s latest intervention could therefore delay the impact of higher costs on consumers, at least in the short term. When asked whether the development could translate into a change in pump prices by Saturday or Monday, Dr. Oppong said the industry would first have to review the new directive. The industry players will assess the impact of the measures on the fuel pricing chain.
The development means motorists are likely to see continued stability at the pumps as government and industry players assess the impact of the measures on the fuel pricing chain. This stability comes as a relief to consumers who have been experiencing pressure on fuel prices. The government’s intervention aims to cushion the impact of global fuel price fluctuations.
Ghana's fuel market has been affected by global shocks, with the country's refining capacity yet to shield it from these external factors. The Tema Oil Refinery and Sentuo Oil Refinery play a crucial role in supplying fuel to the local market. Their decision to maintain prices will help stabilize the market.
The government’s directive to TOR and Sentuo Oil Refinery is a temporary measure to maintain stability in the fuel market. The industry players will continue to review the situation and adjust accordingly. Motorists can expect stable fuel prices in the short term, thanks to the government's intervention.
Key points
- The government has directed TOR and Sentuo Oil Refinery to maintain their existing selling prices to provide relief to consumers amid pressure on fuel prices.
- The Supplier Reference Exchange Rate (SREF) is a key factor in determining pump prices in Ghana's fuel industry.
- The government's intervention aims to cushion the impact of global fuel price fluctuations on consumers.
