Outdated UPPF Model: An Avenue for NPA to Short-Change Petroleum Users in Ghana – CEMSE

The Unified Petroleum Price Fund (UPPF), established by the National Petroleum Authority (NPA) to ensure regular supply and efficient distribution of petroleum products, has been identified by Centre for Environmental Management and Sustainable Energy (CEMSE) as a tool for the state petroleum regulator to generate unnecessary revenue thereby shortchanging petroleum users in the country.

According to the Executive Director of CEMSE Benjamin Nsiah , the NPA is overcharging petroleum users in Ghana by as much as GHS4 billion annually through the UPPF model. This, ihe said, is due to several issues with the fund’s operations.

“The NPA and the tracking company have been the beneficiary of the UPPF. The NPA makes about Ghc2 billion annually and Enterprise Relational Database Management System makes about Ghc1.2 billion annually while the transport sector makes Ghc1.036 billion. Unfortunately, the petroleum user and transport owners are the losers in the model.”

He highlighted that the NPA is collecting 73 pesewas per liter for transportation within a 66km radius, even though the actual cost is only 17 pesewas per liter amounting to overcharging to the tune of GHS1.7 billion annually.

Also, the UPPF has reduced transportation costs, making it difficult for transport owners to recover their investments and pay their drivers well a situation which has led to unrest in the industry.

The Executive Director of CEMSE pointed out that the NPA is using 25 pesewas per liter from the UPPF to fund a tracking system, which is not one of the fund’s intended functions. This he said has resulted in a GHS1.2 billion windfall for a private company, while the transport sector receives only GHS1.036 billion.

Contrary to the UPPF’s purpose of ensuring uniform prices across the country, petroleum prices still vary among Oil Marketing Companies (OMCs), and the recent introduction of a price floor has further contributed to this disparity, he explained.

He also accused NPA for not publicly disclosing the UPPF’s financial accounts, despite the legal requirement to do so, raising concerns about the fund’s management and usage.

Mr. Nsiah as part of his recommendations, called on the NPA to deregulate the UPPF, allowing the cost of freight to be determined by the market between OMCs and transporters while suggesting either re-evaluating of the contract with the tracking service provider and exploring alternative funding sources for the tracking system, or scrapping it entirely.

“The NPA must deregulate the UPPF for the cost freight to be decided by the market between OMCs and transporters. The transport owners and petroleum users will be the final beneficiaries of this action.”

“The NPA should re-evaluate the contract with the tracking service providers because the 25 pesewas per litre is overpriced, and find alternative sources like the Fuel Marking Margin to fund the tracking of BRVs. It could also be totally scrapped since it does solve the problem of unaccounted products.”

By: Bright Yao Dzakah | Metrotvonline.com | Ghana

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