ACEP Reiterates Opposition to NPA Price Floor Policy Amid OMC Price Wars
The Africa Centre for Energy Policy (ACEP) has reiterated its opposition to the fuel price floor initiative introduced into the petroleum downstream sector in 2014 by the National Petroleum Authority (NPA).
The renewed opposition by the energy policy Think Tank comes amid the ongoing price war among Oil Marketing Companies (OMCs), particularly between GOIL and Star Oil.
ACEP recalls that in April 2024, it had strongly rejected the National Petroleum Authority’s (NPA) directive on price floors, arguing that the policy contradicts the NPA Act, 2005 (Act 691), and fails to address the sector’s underlying challenges.
According to the think-tank, many of the NPA’s regulatory functions are outdated in a deregulated market, continuing to impose unnecessary levies on both consumers and industry players. The introduction of price floors, it said, is a reflection of regulatory failure rather than a viable solution.
The Centre highlighted several sector issues that remain unaddressed: the influx of illicit and substandard petroleum products, tax revenue losses due to non-compliance by some OMCs, excessive pass-through charges to consumers, and persistent anti-competitive practices, including price undercutting.
“Price floors reward inefficiency, discourage competition, and increase fuel costs for consumers, while disproportionately benefiting weaker OMCs and BIDECs that struggle to compete,” ACEP noted.
The think-tank further pointed out that the NPA’s own admission of substandard products and unethical practices indicates knowledge of offending operators, yet the Authority has opted for broad protectionist measures instead of targeted enforcement.
ACEP also highlighted the uneven market structure, noting that about 15 per cent of OMCs supply nearly 90 per cent of the market, while over 160 smaller operators account for only 10 per cent, raising concerns about sustaining inefficiency at the expense of consumers.
The Centre is calling for data-driven regulation that focuses on enforcing standards, sanctioning violators, and promoting fair competition without stifling innovation, urging the NPA to prioritise targeted interventions over blanket policies.
