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Star Oil is leaving as a minority voice, now not as it used to be sidelined – COMAC Boss – Life Pulse Daily

Introduction

The Ghanaian downstream petroleum sector is currently navigating a significant shift in its industry representation. The Chamber of Oil Marketing Companies (COMAC), a key body representing the interests of Oil Marketing Companies (OMCs) in Ghana, has recently confirmed the indefinite suspension of Star Oil, one of the country’s prominent indigenous fuel retailers.

While initial reports suggested internal conflict and potential sidelining of smaller players, the narrative is being clarified by COMAC leadership. In a detailed interview on Joy News’ *PM Express Business Edition*, Gabriel Kumi, the Chairman of COMAC, has shed light on the true nature of Star Oil’s departure. Contrary to speculation that Star Oil was forced out or marginalized, Mr. Kumi asserts that the exit is a result of democratic disagreement within the Chamber. Star Oil is leaving as a minority voice regarding the controversial fuel price floor policy, not because it was sidelined, but because it chose to suspend its membership over a policy it disagrees with, despite respecting the majority decision of the Chamber.

This article explores the dynamics of this decision, the mechanics of COMAC’s governance, and the implications of the fuel price floor policy on the Ghanaian energy market.

Key Points

Background

To understand the gravity of Star Oil’s suspension, it is essential to understand the role of the Chamber of Oil Marketing Companies (COMAC). Established to provide a unified voice for OMCs in Ghana, COMAC engages in policy advocacy, stakeholder engagement with the National Petroleum Authority (NPA), and the promotion of best practices within the downstream sector.

Star Oil has been a significant player in this ecosystem. As one of the leading indigenous OMCs, it has built a reputation for competitive pricing and widespread distribution. Its decision to suspend membership indefinitely is a rare occurrence in the tightly knit industry, raising questions about the internal governance of trade associations and the sustainability of current pricing regulations.

The catalyst for this exit is the “fuel price floor” policy. This mechanism, introduced roughly two years prior to the suspension, sets a minimum price at which petrol and diesel can be sold. The policy was designed to prevent “predatory pricing” or selling below cost, which can destabilize the market and drive smaller players out of business. However, the application of this policy has been contentious, with varying interpretations of its impact on consumer prices and business viability.

Analysis

The Mechanics of the Disagreement

Gabriel Kumi’s interview provided a nuanced perspective on the events leading to Star Oil’s suspension. The core of the issue lies in how trade associations manage dissent. In any democratic body, consensus is ideal, but majority rule is the operational reality.

Mr. Kumi clarified that Star Oil’s departure was a voluntary suspension triggered by the Chamber’s adherence to the fuel price floor policy. He noted, “Star Oil is a very key member of the Chamber,” dispelling rumors of an orchestrated push-out. The crux of the matter is that while Star Oil opposed the policy, the majority of the Chamber’s members supported it.

In his statement, Mr. Kumi revealed a critical detail from Star Oil’s correspondence: “I’m happy in the letter that Star Oil wrote to us, it did admit that it respects the view of the majority.” This admission is significant. It reframes the narrative from one of conflict and exclusion to one of principled disagreement. Star Oil is not claiming foul play; it is simply unable to operate under the current consensus and has chosen to step back rather than compromise its position.

Debunking Dominance Myths

A common concern in industry associations is the potential for larger corporations to bully smaller ones. Mr. Kumi explicitly addressed and rejected these claims. He emphasized that COMAC operates on a strict “one member, one vote” basis. “No matter how big you are, you still have one vote,” he stated.

This governance structure ensures that policy decisions, such as the fuel price floor, are not dictated by the largest players but by the collective will of the membership. The price floor policy, for instance, was not an external imposition or a directive from a single dominant entity. It was a proposal pushed forward by the Chamber itself in collaboration with the NPA and accepted by the membership.

The Policy Context: Fuel Price Floor

The fuel price floor policy is a protective measure. In a volatile global oil market, prices fluctuate rapidly. Without a floor, OMCs might engage in price wars, selling below cost to gain market share. While this benefits consumers temporarily, it can lead to financial insolvency for companies and supply shortages in the long run.

However, the policy has faced “challenges,” as admitted by Mr. Kumi. These challenges likely relate to the high operational costs in Ghana, including taxes and levies, which make the minimum price difficult to maintain without eroding margins. Star Oil’s objection likely stems from these operational realities. Yet, Mr. Kumi argues that the policy remains “popular” and “good for the industry” because it ensures stability and protects the sector from predatory practices.

Practical Advice

For stakeholders in the downstream petroleum sector, trade associations, and businesses navigating regulatory environments, the Star Oil-COMAC situation offers several practical lessons:

1. Understanding Association Governance

Before joining a trade body, thoroughly review the governance structure. Understand how decisions are made, what constitutes a quorum, and how dissent is handled. In COMAC’s case, the “one member, one vote” rule means that minority voices must be prepared to accept majority outcomes or exercise their right to exit.

2. Navigating Policy Disagreements

When a business disagrees with a collective policy, it has three options:
* **Lobby for Change:** Work within the association to build a new consensus.
* **Comply and Adapt:** Adjust business operations to align with the policy.
* **Dissent and Exit:** If the policy is fundamentally at odds with the business model, suspension (as Star Oil did) is a valid, though drastic, step.

3. Documenting Dissent

Star Oil’s approach highlights the importance of professional communication. By formally writing to the Chamber and explicitly stating their respect for the majority decision, they maintained professionalism. Businesses should always document their positions clearly to avoid misinterpretation of their exit or dissent.

4. Regulatory Compliance

For OMCs in Ghana, staying aligned with the NPA is crucial. Since the price floor was accepted by the NPA, any OMC challenging it must be prepared for the regulatory implications. Understanding the relationship between trade associations and government regulators is vital for risk management.

FAQ

Conclusion

The suspension of Star Oil from COMAC is a significant development in Ghana’s downstream petroleum sector, but it should be viewed through the lens of democratic governance rather than corporate exclusion. Gabriel Kumi’s clarifications confirm that Star Oil is departing as a minority voice that disagrees with the majority’s stance on the fuel price floor, not as a victim of sidelining.

This event underscores the complexities of balancing collective industry stability with individual company interests. While the fuel price floor policy remains a point of contention, COMAC’s commitment to a unified, democratic approach—where every vote counts regardless of company size—remains intact. For the industry, this is a reminder that consensus is not always unanimity, and that respecting the majority decision is a cornerstone of effective trade association management. As the sector moves forward, the hope is that dialogue will continue to bridge the gap between the majority policy and the concerns of minority voices like Star Oil.