ASEC calls for urgent reform of petroleum downstream sector amid Star Oil’s exit from COMAC

The Africa Sustainable Energy Centre (ASEC) has called for urgent structural reforms in Ghana’s petroleum downstream sector following Star Oil Limited’s indefinite suspension of its membership from the Chamber of Oil Marketing Companies (COMAC).

ASEC, named Energy Think Tank of the Year at the 2025 Ghana Energy Awards, said the development exposes deep institutional and policy challenges within the sector, particularly the continued enforcement of the price floor mechanism by COMAC and the National Petroleum Authority (NPA).

Star Oil, a leading indigenous oil marketing company (OMC), formally announced its withdrawal on Wednesday, January 21, citing unfair representation within COMAC and the association’s failure to advocate for consumer-friendly pricing policies. The company has been vocal in its opposition to the price floor, which it argues restricts competition and prevents cost savings from being passed on to consumers.

Having risen from 13th position in 2020 to market leader in 2025, Star Oil currently commands a 14 per cent market share, with annual sales of about 819 million litres and a network of 254 filling stations nationwide.

The company contributes an estimated GH¢2.63 billion annually in taxes and levies—equivalent to approximately seven per cent of Ghana’s IMF bailout package.

ASEC described the standoff as a defining moment for the downstream sector and a critical test of Ghana’s commitment to fair competition, innovation, and consumer welfare within the broader energy transition agenda.

Price floor under renewed scrutiny

According to ASEC, Star Oil’s advocacy for the removal of the price floor aligns with the principles of market liberalisation, allowing efficient operators to transfer gains from favourable international prices and foreign exchange movements directly to consumers.

Originally introduced as a temporary safeguard against predatory pricing, the price floor has, ASEC argues, evolved into a structural barrier that penalises high-volume, cost-efficient operators while protecting less efficient business models. The mechanism factors in landed costs, taxes, levies and a guaranteed minimum margin, limiting competitive price reductions at the pump.

ASEC noted that the successful removal of price floors for Bulk Distribution Companies (BDCs) did not result in market collapse, describing the continued application of the policy to OMCs as inconsistent with Ghana’s deregulation framework introduced in 2015.

Representation and governance concerns

ASEC also raised concerns over governance and representation within COMAC. As the association’s largest financial contributor, Star Oil expected its pro-consumer views to be fairly represented. However, COMAC leadership reportedly characterised the company’s position as anti-competitive, a move ASEC says undermined both trust and institutional credibility.

“Trade associations must accommodate divergent perspectives to remain legitimate,” ASEC stated, warning that failure to do so risks turning such bodies into shields for inefficiency rather than platforms for reform.

Sector-wide implications

Star Oil’s exit is expected to have significant implications for COMAC, including potential financial shortfalls that could affect its research, advocacy and operational capacity. ASEC cautioned that further resignations could follow, weakening industry cohesion and reducing the association’s influence with regulators and government.

Public perception, the think tank added, increasingly portrays COMAC as a protective cartel prioritising margins over consumer welfare, particularly at a time of rising living costs.

ASEC also criticised the NPA and the Institute for Energy Security (IES) for defending the price floor on grounds of preventing predatory pricing and supply disruptions. It argued that Star Oil’s scale allows it to operate sustainably on lower margins without cross-subsidisation.

The think tank further noted that Ghana’s downstream market—currently comprising over 200 OMCs—would benefit from consolidation into fewer, more efficient operators, improving regulatory oversight and reducing system-wide costs.

Recommendations

To resolve the impasse, ASEC proposed a set of reforms, including:

Governance reforms at COMAC, such as weighted communication protocols, the establishment of an independent research unit, and the integration of consumer advocacy into decision-making processes;

A phased withdrawal of the price floor, to be replaced by a competition monitoring framework using data analytics and cost-to-serve audits to identify genuine predatory pricing;

Greater technological integration, including dynamic pricing models supported by digital tools and artificial intelligence to enable time-of-use and off-peak fuel discounts.

ASEC concluded that without decisive reform, the country risks entrenching inefficiencies in a sector critical to economic stability and consumer welfare.

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