Ghana’s downstream petroleum sector was fully deregulated in July 2015, transitioning from administered pump prices to a market-based system. However, deregulation was not absolute.
To safeguard the market from instability, the National Petroleum Authority (NPA) retained a price floor mechanism, establishing a minimum ex-pump price below which Oil Marketing Companies (OMCs) could not sell.
The objectives were clear: prevent predatory pricing in a capital-intensive industry, protect smaller and emerging OMCs from elimination by dominant incumbents, and preserve competition, supply stability, and consumer welfare in the long run. This policy has remained a core stabilizing instrument of Ghana’s deregulated petroleum market.
The Context of Star Oil’s Call
The recent call by Star Oil’s CEO, Mr. Philip Kwame Tieku, for the removal of the NPA’s price floor is strategically and economically inadvisable and must be firmly resisted. While Star Oil has emerged as the market leader, it is critical to recognize the historical context in which the price floor was introduced and the fundamental role this policy plays in ensuring market stability, fair competition, and consumer protection.
Recent data from the NPA confirms a major shift in Ghana’s downstream petroleum sector. According to the 2025 third quarter NPA Statistical Bulletin, Star Oil Limited recorded 157,886 metric tons of total petroleum product sales, representing 10.42% market share, narrowly surpassing GOIL PLC, which posted 153,767 units (10.15%). This achievement underscores Star Oil’s operational strength and growth trajectory.
However, this success story adds critical context to the company’s call for price floor removal. The top 20 OMCs account for 71.3% of total market volumes, while nearly 29% remains distributed among smaller operators—almost 200 in number. This indicates a still-competitive and diversified market, one that has flourished under regulatory safeguards.
The Price Floor’s Historical Role
When the price floor was instituted, Star Oil was not the dominant player it is today. The absence of a price floor would have exposed weaker players to predatory pricing by larger competitors seeking to capture market share through below-cost pricing strategies. The NPA’s price floor, calibrated to reflect reasonable distribution costs, import parity, and sustainable margins, prevented destructive undercutting that could drive firms out of business and erode market competition.
Eliminating the price floor now would undermine the very conditions that allowed this diversified market to develop. Star Oil’s current position is partly a function of competing in a regulated environment that prevented price wars and ensured all players could operate viably.
Why Removing the Price Floor Would Be Damaging
1. Encourages Predatory Pricing and Market Dominance
Without a minimum price benchmark, Star Oil—with its superior supply chain efficiencies, capital base, and economies of scale—could aggressively lower prices below competitors’ cost structures. This would pressure smaller, less capitalized marketers out of the market, ultimately reducing competition and leading to market consolidation under a single dominant entity.
2. Risks Market Instability and Supply Disruptions
Price floors provide predictability and reduce volatility in retail pricing. Their removal could trigger erratic price movements, undermining consumer confidence and complicating planning for enterprises reliant on stable fuel costs, including transportation and manufacturing sectors.
3. Undermines Fair Competition and Long-Term Investment
A stable and regulated price environment encourages investments in infrastructure, storage, distribution networks, and service stations. Removing the floor would shift the sector toward short-term price competition rather than long-term strategic investments that enhance capacity and service quality.
4. Compromises Consumer Welfare in the Long Run
Lower prices might initially appear beneficial to consumers. However, once competition weakens and smaller firms exit the market, Star Oil’s dominance could enable it to dictate prices without countervailing competitive pressures, ultimately raising prices above levels that prevail under regulated competition.
The Irony of Star Oil’s Position
Notably, the same Star Oil CEO, in October 2025, attributed his company’s resilient growth to the deregulated downstream petroleum market—one in which the price floor is a significant component. His current argument is not without merit. Given Star Oil’s scale, logistics efficiency, and purchasing power, it could indeed lower pump prices in the short term, delighting “StarSavers” today. But in the long run, consumers may have nowhere to turn when significant competition has been eliminated.
The Way Forward
The NPA’s price floor is not an arbitrary constraint on market forces; it is a corrective mechanism designed to ensure that competition is conducted on the basis of efficiency, service quality, and innovation—not on the basis of unsustainable price undercutting. It has been critical in protecting emerging and smaller firms, fostering a more diverse sector, and maintaining orderly market functioning.
Any suggestion to abolish the price floor policy must be strongly rejected, as it would undermine fair competition and long-term consumer protection. Instead, efforts should be directed toward enhancing transparency in pricing, strengthening regulatory oversight, and promoting competitive practices that level the playing field without dismantling the safeguards that underpin a balanced downstream petroleum market.
The price floor has served Ghana well. It should remain.
By
Gabriel Nomotsu Teye-Ali
About the Author
The author is General Manager of a leading energy company in Ghana and a finance, economics, and natural resource analyst with extensive expertise in Ghana’s petroleum sector. He holds a Master of Science in Business Administration from the University of Northern British Columbia, Canada, and an MPhil from the University of Ghana Business School (UGBS), where he also served as a part-time lecturer in Finance. He has written extensively on ESG, minerals, oil, and gas, providing critical analysis on energy policy and market regulation in Ghana and beyond.
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