- Petroleum Margins Have Outgrown Their Governance Framework — ACEP
The Africa Centre for Energy Policy has called for greater scrutiny of petroleum-pricing margins after an Auditor-General’s performance audit recorded a GH¢2.05bn surplus in the Uniform Petroleum Pricing Fund over three years.
The energy think-tank said the finding raised questions about the destination of accumulated balances, the expenses charged to the fund and the limited parliamentary oversight of revenues collected from consumers through administered fuel prices.
Figures presented by ACEP from the audit show that the UPPF received GH¢13.22bn during the period under review and recorded expenditure of GH¢11.17bn, leaving a difference of GH¢2.05bn.
The audit finding does not, by itself, establish that the surplus was misappropriated or that corruption occurred. But ACEP argues that the size of the balance requires a clear public account of where the money was held, whether it was subsequently spent and what authority governed its use.
Mr Kodzo Yaotse, Policy Lead at ACEP, said the findings reinforced concerns the organisation had raised over the rapid increase in the UPPF margin and the limited visibility surrounding expenditure from the fund.
“We have tried countless times to get a certain breakdown on how the fund is managed,” Mr Yaotse said.
He was speaking at a media training workshop on the Auditor-General’s Performance Audit Report on the operations of the National Petroleum Authority.
The programme was organised by the Ghana Anti-Corruption Coalition in partnership with ACEP and Transparency International Ghana, with funding from the UK Foreign, Commonwealth and Development Office.
The UPPF is intended principally to equalise the transportation cost of petroleum products so that consumers in locations farther from supply centres do not pay substantially more for fuel purely because of distance.
ACEP said the margin rose from 22 pesewas per litre in 2018 to 90 pesewas in 2024, an increase of more than 300 per cent.
The organisation has questioned whether the current rate continues to reflect the economic cost of transporting petroleum products and whether some expenses historically charged to the fund were consistent with its primary purpose.
“If government wants money to buy fuel for security agencies, there are appropriate mechanisms which is passed into the budget,” Mr Yaotse said.
“But why do you ask your regulator to charge certain costs under the guise of transporting commodities?”
The question goes to the heart of the distinction between public revenue collected through the national budget and money raised through regulatory pricing mechanisms.
If government requires funds for security operations or another public purpose, the conventional process is for the expenditure to be included in the budget, scrutinised and approved by Parliament.
When the same expenditure is financed through a margin placed on each litre of fuel, consumers still bear the cost. But the collection and spending of the money may not pass through the same appropriation and disclosure processes applied to taxation.
ACEP estimates that regulatory margins embedded in petroleum prices generate about GH¢7.6bn annually. This compares with approximately GH¢9.7bn raised through petroleum levies.
Although both ultimately increase the price paid at the pump, their governance routes differ.
Petroleum levies are established through legislation and subjected to parliamentary approval. Regulatory margins are generally administered through the petroleum-pricing framework and do not face an identical appropriation process.
That difference may have appeared less consequential when the margins generated relatively modest amounts. At GH¢7.6bn annually, however, the sums involved are too large to be treated as a minor regulatory adjustment.
The margins now constitute a major pool of public-purpose revenue collected from consumers. Their growth raises a fundamental fiscal question: at what point does a regulatory charge become sufficiently large and functionally similar to a tax that it should face equivalent standards of parliamentary scrutiny?
The issue is not merely whether the NPA has the legal authority to establish or administer margins. It is whether Ghana’s accountability systems have evolved at the same pace as the revenue raised through those mechanisms.
According to ACEP, the performance audit did not establish what happened to the GH¢2.05bn difference between UPPF receipts and expenditure.
It also did not examine all the issues the think-tank considers material, including procurement processes associated with some contracts and the beneficial ownership of companies undertaking work financed through the mechanism.
These omissions do not prove wrongdoing. They show the limits of what the audit established and identify areas that may require further examination.
A surplus can arise for legitimate reasons. Revenue may exceed expenditure because of conservative cost estimates, delayed payments, planned future obligations or the need to maintain a buffer.
But where consumers are compelled to pay a margin whenever they purchase fuel, the institution administering the proceeds should disclose the purpose of any accumulated balance, where it is held and how decisions are made about its use.
Without that information, a surplus can become indistinguishable in the public mind from an unexplained fund.
ACEP has also challenged the economic philosophy behind uniform petroleum pricing.
“Why should my consumption subsidise their consumption?” Mr Yaotse asked, pointing to differences in land, congestion and operating costs between Accra and other parts of the country.
The UPPF reflects a policy choice: consumers closer to fuel-supply centres contribute towards the transport cost of serving consumers farther away. Its social rationale is national price equality and protection for geographically disadvantaged communities.
Removing the mechanism could allow fuel prices to vary more sharply across regions, potentially imposing significantly higher costs on rural and remote communities.
The relevant policy question is therefore not simply whether cross-subsidisation exists. It is whether the size of the margin is economically justified, whether the transport claims paid from it are independently verified and whether all expenditure is consistent with the fund’s stated purpose.
A well-governed equalisation mechanism can support national cohesion and protect consumers. A poorly governed one can become a convenient collection channel for expenses that should have been subjected to the national budget.
Fuel-price margins can appear insignificant when presented as a few pesewas per litre. Across billions of litres of petroleum products, however, those charges accumulate into billions of cedis.
That scale requires routine disclosure of collections, payments, administrative costs, beneficiaries, investment income and closing balances.
It also requires clear rules preventing the fund from being used for purposes unrelated to petroleum-price equalisation without parliamentary approval.
The Auditor-General’s finding should therefore be treated as the beginning of further scrutiny rather than a conclusion of wrongdoing.
The NPA should provide a reconciliation of the GH¢13.22bn collected, the GH¢11.17bn spent and the GH¢2.05bn balance. It should also explain the methodology used to determine the margin and disclose whether the rate is periodically reviewed against verified transport costs.
Parliament must consider whether regulatory margins of this magnitude require a stronger statutory reporting and appropriation framework.
For motorists, the issue is straightforward. Every pesewa added to a litre of petrol or diesel eventually becomes a substantial pool of money.
ACEP’s argument is that compulsory payments should not attract weaker scrutiny merely because they are called margins rather than taxes. As the sums have grown, the distinction between regulatory pricing and public revenue has become increasingly difficult to defend without equally strong accountability.
