Stakeholders and energy experts across African countries and other international players have called for effective regulations that would mitigate inherent challenges in the downstream segment of the continent’s petroleum industry.
They also noted that non-market pricing structures, complex supply chains, smuggling and adulteration of products are amongst the pressing issues that could hamper investments in the African downstream oil sector, the experts insisted that projected gains attributable to the sector may remain elusive unless the continent embarks on full deregulation of the sector along with coordination and harmonisation of policies to enhance the market environment.
The various stakeholders spoke at a virtual event led by the African Refiners & Distributors Association (ARDA) under the 2021 ARDA Virtual Work Group Workshop Series with this edition focusing on the “Role of Regulators in ensuring Compliance with AFRI Fuels Roadmap.”
Currently, the African Union and ARDA are working on the introduction of harmonized, pan-African cleaner fuel AFRI-6 (10 ppm Sulphur) specifications for gasoline and gasoil/diesel across the continent by 2030. ARDA is encouraging all its Members to invest in near-term upgrades for their refineries and associated facilities to enable them meet AFRI-6 specifications directly thereby future-proofing their facilities by ensuring their productions meet global clean fuel specification standards.
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The ultimate goal of the initiative was to deploy ARDA AFRI Clean Fuels roadmap to deliver continent-wide cleaner fuel specifications at a steady, progressive pace between now and 2030.
The AFRI Clean Fuels Roadmap is expected to promotes a framework that covers both cleaner fuels (AFRI-6 by 2030) and cleaner vehicles (vehicle emissions standards, age limit for used car imports, etc.) so that Africans can enjoy the full benefits of reduced pollution and cleaner air.
Speaking at the event, ECOWAS’ Director of Energy, Bayaornibe Dabire, disclosed that range of fuel specifications in the sub-region spans from 50 ppm Sulphur in some countries to 10, 000 ppm Sulphur in others. The need for harmonization according to him, led to the issuance of ECOWAS Directive C/DIR.2/09/20 last year, which covers exhaust gas and particulate emission limits for two-wheeled, light and heavy vehicles.
Dabire stressed that any improvement in fuel specifications without alignment with vehicle emission limits would not have the desired effect, and stated that “Member States shall prohibit the imports of gasoline and diesel, which does not comply with the harmonised fuel specifications.”
From January 1, 2025, Dabire said only gasoline and diesel that meets the harmonized fuel specifications can be marketed within the ECOWAS region. A waiver would be provided for refineries within the region to remain operational while they introduce measures to comply with the Directive, he noted.
Dabire disclosed further that the age limit for importing vehicles into the ECOWAS region has been set as five years for light-duty vehicles, two-wheel motor vehicles, tricycles and quadricycles and 10 years for heavy-duty vehicles, adding that a period of 10 years would be granted to countries that have not yet adopted the age limits to gradually comply.
ARDA’s Executive Secretary and Chief Executive Officer, Anibor Kragha insisted that effective regulatory frameworks remain critical for development of the sector, especially as Africa’s population is projected to increase significantly over the next two decades. The growth in population to him, would in turn lead to increase in demand for petroleum products.
Kragha also shared the core components for effective regulation, which include clarity on the regulator expected to create the rules and dispenses consequences, clarity on targets (individuals or organisations) to which the regulations apply, definition of what the rule or regulation demands of the targets and finally, the consequences for non-compliance.
He stated: “The workshop attendees were able to see how a strong regulator like National Petroleum Authority (NPA) in Ghana has used data-driven decisions to effectively regulate the Ghanaian market and facilitate key reforms in the area of cleaner fuel imports, while lack of clarity on the ownership, roles and responsibilities of regulation activities has led to sub-optimal regulations in other countries like Ethiopia and Niger.”
Director, Pricing, Planning & Research at National Petroleum Authority (NPA) in Ghana, Alpha Welbeck, showed how activities are monitored digitally across the value chain from offshore to retail, providing end-to-end visibility of operations and reducing the tendency for companies to cut corners or make abnormal profits.
Welbeck stated that in Ghana, which currently has the lowest Sulphur content specifications (50 ppm) for fuels in the ECOWAS sub-region, the Ghana Standards Authority periodically calibrates the fuel dispensers of the 4,300 retail outlets in the country to ensure that the right quantity of products is consistently dispended to consumers.
“The NPA has commenced installation of Automatic Tank Gauging System (ATGS) at all retail outlets to enhance monitoring of volumes supplied as well as improve the control of illegal fuel activities such as illegal imports, dumping and diversion,” she noted.
Chief Executive Officer, National Oil Ethiopia, Tadesse Tilahun, stated that effective regulatory support has not yet been fully addressed in Ethiopia thereby leaving the downstream sector vulnerable to unfair trade practices and multiple supply and distribution challenges.
He added that the different regulatory activities of the sector have been handled by different government ministries, without adequate coordination and/or single-point accountability for responsibilities clearly defined.
He said,” The sector in Ethiopia is faced with scattered regulatory roles across multiple government organs making decision-making processes very complex and ultimately increasing the difficulty in ensuring smooth fuel supply throughout the country.”
Tilahun also identified other problems, including low level of monitoring and enforcement of industry operation standards and easy entry into the industry without adequate due diligence, but stated that a new structure has been proposed to the government for a single Regulatory Body (Ethiopia Petroleum Regulatory Agency) to be warehoused under the Ministry of Trade and coordinate all regulatory activities in the sector.
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