NPA responds to ACEP’s concerns over implementation of price floor for petroleum products

The National Petroleum Authority (NPA) has responded to concerns raised by the Africa Centre for Energy Policy (ACEP) regarding its decision to implement a price floor for petroleum products starting April 16, 2024.

In a recent press release, NPA addressed ACEP's contention that the move exceeds the authority's mandate and is potentially illegal. The NPA clarified that the price floor

Read full articleis intended to address concerns about unhealthy price competition among Petroleum Service Providers (PSPs) without compromising consumer interests or imposing high prices.

According to the NPA, the establishment of a price floor aims to ensure that PSPs can cover their fixed costs, taxes, levies, and statutory margins. However, the price floors will exclude PSPs' profit margins, allowing them the freedom to determine their own margins as per the existing price deregulation policy.

The NPA emphasized its commitment to promoting competition in the petroleum downstream industry and assured that the price floors will not hinder PSPs from independently setting their margins, thereby maintaining healthy competition.

Furthermore, the NPA announced its intention to publish the price floors before each pricing window to ensure transparency and accessibility for the public.

The implementation of the price floor is part of the Amended Pricing Guidelines introduced by the NPA, effective April 1, 2024. The Authority advised all PSPs to adhere strictly to the guidelines and promised to provide them with comprehensive pricing formula information for each pricing window.

Read the full statement below: