NPA, TOR dragged to court... for charging illegal fuel prices

DEVELOPMENT DATA (DD), a Policy Research and Advocacy organization has filed a law suit against the National Petroleum Authority (NPA) and Tema Oil Refinery (TOR) at an Accra High Court. The other two plaintiffs are Mr. Kwaku Kwarteng, the Executive chairman of DD and Mr. Abdul Ganiyu, an advisor to the first plaintiff organization .

They are claiming against Defendants jointly and severally, a declaration that the ìex-refinery differentialî component of the ìex-refinery priceî imposed by the first Defendant on June 5, 2009, was illegal and that the ex-pump prices announced by the first Defendant on June 5, 2009, on the basis of the ìex-refinery prices referred to, were not in accordance with the prescribed petroleum pricing formula and therefore unlawful.

Other reliefs of the plaintiffs are an order for the second Defendant to cease the collection of the illegal ex-refinery differentialî for the first Defendant, as well as an order to direct the defendants to publicly declare the amount of money accrued from the imposition of the illegal ìex-refinery differentialî and to pay same into the Consolidated Fund.

They are also seeking an order for the first Defendant to publish periodically in the Gazette, import parity prices of refined petroleum products as well as an order of perpetual injunction restraining the 1st Defendant from imposing the exploitative ex-refinery differential.

The plaintiff organization claims that the current fuel prices are false and, therefore, is seeking a declaration of the court that the true prices of fuel, as at June 5th 2009, which have since not been varied should be as follows:

Diesel GH¢4.15 (¢41,500), Petrol GH¢4.77 (¢47,700), Kerosene GH¢3.51 (¢35,100), LPG gas (per kg) GH¢3.55, Premix GH¢3.25 (¢32,500) and MGO local GH¢3.53 (¢35,300) instead of GH¢5.09 (¢50,900), Petrol GH¢5.06 (¢50,600), Kerosene GH¢3.93 (¢39,300), LPG gas (per kg) GH¢3.63 (¢36,300), Premix GH¢2.34 (¢23,400) and MGO local GH¢4.22 (¢42,200).

The plaintiffs are also seeking a directive of the court asking the NPA to permanently abolish the so-called ex-refinery differentialî since it is completely illegal and exploitative of consumers.

In a 16-point statement of claim filed before an Accra High Court on Monday, September 28, 2009, and duly served on the defendants in Accra and Tema respectively, the plaintiffs contended that the first Defendant is a body corporate set up under the National Petroleum Authority Act, 2005 (Act 691) and has a statutory duty to protect the interest of consumers and petroleum service providers, to periodically review in consultation with petroleum service providers the prescribed petroleum pricing formula, and to publish in the Gazette the respective formula; to monitor daily the import parity prices of refined petroleum products and publish the prices as well as periodically in the Gazette; and to publish in the Gazette the ex-refinery and ex-pump prices of petroleum products based on the prescribed petroleum pricing formula.

The second defendant was described as is a body corporate set up by Government of Ghana and is in the business of importing and refining crude oil and selling same to the oil marketing companies for sale distribution to retail filling stations across the country.

The plaintiffs averred that the prescribed petroleum pricing formula made pursuant to the National Petroleum Act, 2005 (Act 691) is:

i. CIF = Cost (FOB) + Insurance + Freight; ii. Related Charges = Off-loading cost + In-transit losses + Inspection + L/C cost + Financial costs + Storage cost + In-plant losses + Rack loading cost + Operating margin;

iii. Ex-refinery Price = CIF + Related Charges and iv. Ex-pump Price = Ex-refinery Price + Government taxes and levies + Margins.

They argued that on June 5th, 2009, the National Petroleum Authority published the following ex-refinery prices of petroleum products that were not in accordance with the prescribed petroleum pricing formula as follows: Premium 80.4800 GHp per litre; kerosene 74.1074 GHp per litre; Gas Oil 89.3087 GHp per litre; MGO Local 83.6542 GHp per litre; LPG Gas 75.9196 GHp per kilogram and Premix 39.2408 GHp per litre.

According to the Plaintiffs the ex-refinery prices published on June 5, 2009 by the first defendant included an extraneous imposition of what the first defendant called ìex-refinery differentialî as follows: Premium 6.4874 Ghp per litre; Kerosene 9.2680 GHp per litre; Gas Oil 20.7890 GHp per litre; MGO Local 15.1149 GHp per litre; LPG Gas 1.6519 GHp per kilogram and Premix -19.9533 GHp per litre.

The plaintiffs claimed that there is no ìex-refinery differentialî element in the true prescribed petroleum pricing formula.

On the basis of the false ex-refinery prices which included the extraneous ìex-refinery differential, the first defendant announced maximum ex-pump prices of petroleum products as follows: Premium 111.41 Ghp per litre; Kerosene 86.45 GHp per litre; Gas Oil 112.06 GHp per litre; MGO Local 92.82 GHp per litre; LPG Gas 79.82 GHp per kilogram

Premix 51.48 Ghp per litre while the plaintiffs aver that the true ex-refinery prices exclusive of the extraneous and unlawful ex-refinery differential as at June 5, 2009 should have been as follows: Premium 73.9926 GHp per litre; Kerosene 64.8394 GHp per litre; Gas Oil 68.5197 GHp per litre; MGO Local 68.5393 GHp per litre; LPG Gas 74.2677 GHp per kilogram and Premix 59.1941 GHp per litre.

The plaintiffs said based on the true ex-refinery prices, the applicable taxes, levies and margins, the true maximum ex-pump prices accordingly should have been: Premium 104.9226 GHp per litre; Kerosene 77.1820 GHp per litre; Gas Oil 91.2710 GHp per litre

MGO Local 77.7051 GHp per litre; LPG Gas 78.1681 GHp per kilogram and Premix at 71.4333 GHp per litre.

They contended that contrary to National Petroleum Authority (Act, 2005 Act 691), the first Defendant neglected, failed and/or refused to gazette the import parity price of refined petroleum products as at June 5, 2009.

The statement of claim indicated that in order to conceal the illegal price top-ups from the public, and to unjustifiably profit from same, the first defendant by a confidential letter dated June 5, 2009, directed the second defendant to pay the differences between the true ex-refinery prices and false ex-refinery prices, which the first Defendant referred to as ìex-refinery differentialî into first defendantís bank accounts.

According to the plaintiffs, the said ex-refinery differential was an illegal imposition by the first defendant as it did not have the authority to do so and that it has imposed an illegal charge on consumers in its maximum fuel prices announced on June 5, 2009 and thus describing the action of defendants as unlawful and an extortion of consumers of petroleum products in the country for which the plaintiffs seek an order of the court to restrain them (Defendants) from their unlawful actions.