The Institute for Energy Security (IES) says Star Oil’s decision to suspend its membership of the Chamber of Oil Marketing Companies (COMAC) weakens the collective voice of the industry body at a critical time, particularly as discussions loom with the National Petroleum Authority (NPA) over the price floor policy contained in the 2024 petroleum products pricing guidelines.
Star Oil announced on Wednesday, January 21, that it had suspended its COMAC membership with immediate effect, citing dissatisfaction with how the Chamber has handled its opposition to the price floor policy.
The company maintains that its call for the removal of the price floor has not been clearly articulated or adequately communicated by COMAC in both internal deliberations and public engagements.
According to Star Oil, this has contributed to a perception that its position is driven by anti-competitive intentions or improper motives.
Star Oil argues that while it acknowledges and respects the majority view within COMAC in support of retaining the price floor, the Chamber has failed to reasonably recognize and explain the basis of its dissenting position, despite the company being a key player in the downstream petroleum market.
Reacting to the development in an interview with Citi Business News, Senior Research and Policy Analyst at the Institute for Energy Security, Derrick Xatse, noted that the suspension does not bode well for COMAC, particularly given Star Oil’s status as a market leader.
He added that the development risks weakening the Chamber’s influence in ongoing policy discussions.
“To a larger extent, none of them (COMAC and Star Oil) benefit. Especially it goes to the disadvantage of Star Oil because if you take all the oil marketing companies, we have over 144 active oil marketing companies across board.
“Now, Star Oil, being the leader, serves about 10.7% of the market. Then, if you take the first 20 oil marketing companies, they serve about 80% of the market. So you have a chunk of oil marketing companies, about maybe 100 plus, that are almost serving just the 20% of the market.
“It is not like Star Oil is having like 50% market share. So if you have COMAC, which is the mother body, which controls about say 83% or let me say 87% of the market share, then definitely they have a stronger voice even though if the leader of the industry, that is Star Oil, had added their voice to COMAC, it would have driven home the point that they wanted to achieve.
“But now that they are out of it, it lessens the voice of COMAC a little bit. But the more disadvantaged one is Star Oil,” Derrick Xatse said.
He also urged Star Oil to avoid adopting an entrenched position and expressed hope that the matter could be resolved amicably in the interest of industry cohesion.
“For it to get to the point that one of their members who wants to pull out, especially not just an ordinary member, but a leader in the Ghanaian downstream industry or among the OMCs, especially like Star Oil, is quite unfortunate. But whatever thing that it is, they must be able to engage internally and come out with a concrete voice, one voice, because it is good for the industry. When you speak as a collective voice, it is better than doing it individually.
“It is high time that we expect that they come back together and have a uniform voice. Star Oil should also not take that entrenched position because, one, it is a market leader as it stands right now.
“Two years ago, when they implemented this particular price floor, would they have opted to be out of the chamber if maybe this same decision were to be threatened by a different person? I am not sure they would have taken that particular entrenched position.
“So they should go back to the drawing table, resolve whatever disagreement that is between them internally, and then be able to come to a consensus so that we can have a collective voice in the industry. That is how they will be able to engage the regulator NPA constructively,” Derrick Xatse added.
Meanwhile, COMAC is expected to hold a board meeting today to forge a unified position on the price floor policy. Star Oil’s suspension is anticipated to feature prominently on the agenda as the Chamber seeks to manage internal divisions and present a consolidated stance ahead of further engagement with the regulator.
Source: citinewsroom.com
