Petroleum is nervous system of the economy – NPA boss explains why fuel security is national security

The CEO of the National Petroleum Authority (NPA), Godwin Edudzi Tamakloe, has described petroleum supply as a critical national security issue, stressing its importance to the functioning of Ghana’s economy.

Speaking on Joy News’ PM Express Business Edition on Thursday, Mr Tamakloe said petroleum products are at the core of economic activity, making the management of the downstream petroleum sector a strategic responsibility.

“Petroleum products are at the core of this economy,” he said.

He explained that unlike some other services, consumers have limited alternatives when petroleum products are unavailable.

“When people don’t have light, they can adjust for 24 hours. They can adjust even 12 hours. But when they don’t have petroleum products, they have no alternative. They can’t even use water or anything.”

His comments come as the downstream petroleum sector continues to face pressure from external market developments. Ghana relies heavily on imported petroleum products, exposing local prices and supply conditions to movements in global oil markets and the exchange rate.

Mr Tamakloe said the NPA’s approach is therefore to ensure that the industry is protected against both external shocks and domestic challenges.

“And so, at the core of the management of the downstream is the whole idea of national security. Very strategic area. It’s at the it’s like the nervous system of the entire economy.”

He said the need to build resilience into the sector had been recognised following fuel supply challenges experienced in Ghana around 2014 and 2015.

According to him, those challenges were internal and led to queues at fuel stations despite product availability.

“Those queues were internally generated. It was not because there was no availability of products, but for some obvious reasons, there was quote, unquote, an artificial shortage of products at the various pumps, and that created in itself some queue.”

Mr Tamakloe said lessons from that period informed efforts to hedge the industry against similar disruptions.

He noted that the petroleum sector is also heavily influenced by developments outside Ghana, making effective management of those external pressures essential.

“Listen, you’re going to handle an industry that is also subject to external issues, but the internal, you must find a way to manage it.”

The NPA boss identified three principal factors that typically affect the availability and pricing of petroleum products.

“Let me say this: there are three principal things that usually impact petroleum products availability and pricing: the FOB, the tax component, and most importantly, because it’s an imported product, the exchange rate.”

Mr Tamakloe said the combination of these factors makes petroleum pricing and supply management a complex task, particularly when global developments affect an industry that depends significantly on imports.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.