Energy Analyst and CEO of Euroka Energy Solutions, Dr Yussif Sulemana has taken a swipe at the National Petroleum Authority (NPA) for reintroducing the Price Stabilisation Recovery Levy in the price build-up.
To him, this is not the best decision to take at this time of rising fuel prices.
The NPA in a letter dated Wednesday, April 3, indicated that Oil Marketing Companies (OMCs) were advised to bring back the levy effective Thursday, April 4.
The regulator, in a March 28 letter, directed the OMCs and LPG Marketing Companies to remove the stabilization levy, effective April 1 to June 30, 2024.
“The National Petroleum Authority hereby wishes to inform all Oil Marketing Companies (OMCs) and LPG Marketing Companies (LPGMCs) that there has been a follow-up directive, hence the PSRLs have been revised as indicated in the Table below effective 4th April 2024,” parts of the letter read.
It added that “All Oil Marketing Companies (OMCs) and Liquefied Petroleum Gas Companies (LPGMCs) are to take note of the above revision of the PSRL and apply them in their Price Build-Ups effective 4th April 2024.”
Read also: Petroleum products: NPA drops Price Stabilisation Levy from price build-up, effective April 1
Following the reversal, 16 pesewas would be added to every litre of petrol, 14 pesewas on a litre of diesel, and 14 pesewas to every Kg of Liquefied Petroleum Gas (LPG).
Speaking on the news central on TV3 Friday April 5, Dr Yusif Sulemana said “That policy, I have my problems with respect to that. That policy will not have the slightest impact on what is happening on the international space or with these factors that are happening, that will not. I criticized that particular strategy by the NPA in the sense that they are rather capping some OMCs not below certain values, it is not the other way round
“If the policy was to say that some OMCs shouldn’t sell above a certain value then that would hold credibility or that would hold some benefits we are talking about. we are talking about the impact of the pump prices If you look at the policy even though they said they will put it on hold, NPA should step back and revisit. If you do that it will rather come to the disadvantage of the consumer.
“It is interfering with the market with the deregulations that is already not in good shape. Doing that will rather weaken deregulation because some OMCs cannot sell below certain values. Imagine, that some OMCs are strategically located, others are not strategically located so the only competitive advantage they have will be the price. so I had my problems with that and I believe NPA has also seen the sense to revisit the policy.
“So that kind of policy, I don’t see how it will have an impact on reducing the pump prices. Alternatively, what could have an impact on reducing the pump prices would have been the taxes. I noticed that the NPA took out the price stabilization levy and within a twinkle of an eye they have brought it back again. So as to why they brought it back, we are still waiting to get a credible answer.
Rising cost of fuel: No escape for the consumer – Energy Expert
“If you look at the exchange rate, look at the international dynamics, and the taxes, the only thing we can do is to look at the taxes, levies, and margins, let us do something about it. Most of them have outlived their useful lives.”
About PSRL
The Energy Sector Levies Act of 2015 (Act 899) empowers the National Petroleum Authority to set long-term petroleum product pricing for consumers.
It currently charges 16 pesewas per litre for petrol, fourteen pesewas per litre (GHp14/Lt) for diesel and 14 pesewas per kilogramme (GHp14/Kg) for LPG.
In recent times, the government has used the suspension as an intervention to protect consumers of petroleum goods from rising global costs.
That is, once prices reach a level that may harm consumers, the government suspends the imposition of the stabilisation levy on petroleum products.