The National Petroleum Authority (NPA) is concerned about the increasing cost of liquefied petroleum gas (LPG) and its impact on discouraging the use of fuel wood, especially in rural areas. Over the past few years, the price of LPG has risen significantly, from 5.81 cedis per kilogram in January 2020 to as high as 240 cedis currently for a 14.5-kilogram cylinder.
The LPG Marketers Association attributes this price hike to several factors, including rising world crude prices, a $80 per metric ton tax to support the government’s cylinder re-circulation model, and the NPA’s failure to reduce the premium for bulk distribution companies by $70.
This situation has raised concerns among consumers and experts, particularly since LPG, once subsidized to promote affordability, now carries multiple taxes and levies following subsidy removal.
Grace Zateh, a food vendor in Koforidua, highlighted that high LPG costs and other factors discourage her from using LPG. She mentioned, “The price of LPG is very high, so economically, it’s better for me to use charcoal. Also, some foods taste better when cooked on a coal pot, so customers prefer it. But if LPG prices come down with the Cylinder Recirculation Model (CRM), we may switch gradually.”
Addressing these concerns at the launch of the Consumer Week celebration in Koforidua, NPA CEO Mustapha Abdul-Hamid expressed worry over the rising LPG prices. He assured efforts are underway to make LPG more affordable, aiming for 50% of Ghanaian households to use LPG for cooking by 2030.
Abdul-Hamid emphasized the importance of reducing LPG prices to discourage reliance on fuel wood, particularly in rural areas where it remains a readily available option.
Regarding the Cylinder Recirculation Model (CRM), Abdul-Hamid outlined efforts to accelerate LPG distribution through supervised bottling plants and licensed cylinder exchange points. He described the CRM as pivotal for job creation, enabling various entrepreneurship opportunities, even for recent graduates.
Deputy Energy Minister Collins Adomako-Mensah reiterated the government’s commitment to expanding clean energy use, including the distribution of 28,000 LPG stoves and accessories across 13 districts. Eastern Regional Minister Seth Kwame Acheampong emphasized the flexibility of the CRM to enhance access to LPG without requiring consumers to purchase cylinders outright.
Acheampong called for continued investment to promote LPG usage awareness and accessibility, acknowledging the CRM’s role in bringing LPG closer to communities through cost-effective cylinder exchange points.
This decision has resulted in a domino effect on fuel prices at gas stations, adding to the burden on the public.
The NPA issued a circular instructing industry players to raise the UPPF margin by GH₵0.05 per liter of fuel in the Price Build Up for petroleum products starting from June 1, 2024.
As a result, petrol and diesel prices climbed to GH₵14.84 per liter at some service stations on Tuesday, June 4, 2024.
Executive Secretary of COPEC, Duncan Amoah, reacted to this development, stating that consumers are already struggling with high fuel prices due to currency depreciation.
He criticized the decision to increase the margin, emphasizing that it adds to the financial pressure on consumers when prices should ideally be reduced.
“These things simply continue to add onto the pressure that fuel prices continue to face in the country. It is quite unfortunate that we continue to add on at a time that we should be thinking of reducing prices for our people. Prices simply would end up going up because we have done an increase in some of the margins just a few days ago, not good enough”, he said.
Amoah also highlighted that global crude oil prices have significantly dropped recently, suggesting that fuel prices should have decreased accordingly.
He argued against passing on costs to consumers, mentioning that the UPPF margin has doubled from around 45 pesewas per liter to 90 pesewas per liter, eroding potential consumer benefits.
“Indeed fuel prices should have declined in the last window and this window. The cedi’s performance has been largely blamed for the prices still being where they are and very high. UPPF used to be around 45 pesewas a litre but unfortunately we’ve had to increase it and increase it. Currently we’ve also adjusted it to now 90 pesewas a litre”, he lamented.
Some oil marketing companies have already raised prices at the pumps, with Shell selling petrol and diesel at GH₵14.84 per liter.
GOIL, on the other hand, is selling petrol at GH₵14.60 (up from GH₵14.55) and diesel at GH₵14.75 (up from GH₵14.70), attributing the adjustment to the increased UPPF margin.
Without the margin increase, prices would have remained unchanged according to industry insiders.
The National Petroleum Authority (NPA) is standing firm in its commitment to reduce operational costs for liquefied petroleum gas (LPG) traders.
This comes after concerns raised by the Liquefied Petroleum Gas (LPG) Marketers Association regarding an $80 per metric ton (MT) fee imposed on suppliers’ premiums.
The fee is specifically aimed at boosting investment margins for bottling plants and cylinder infrastructure.
Abass Ibrahim Tasunti, NPA’s Head of Economic Regulation, stressed the authority’s proactive approach in addressing industry challenges for long-term sustainability.
Tasunti pointed out innovative measures such as consolidating quantities among Bulk Distribution Companies (BDCs) to lower import costs.
“Taxes are what usually generate revenue for governments. So if governments can generate taxes from elsewhere, then they can consider reducing some of the taxes on a particular product or service. And that is the appeal we are making. The other thing NPA has done, whilst waiting for the government to respond to the call for a reduction of taxes, is to find a way to introduce innovative ways to reduce the cost of LPG. So we started discussing with the BDCs that, if you look at the way we used to import LPG, you could have a BDC paying a premium to the international oil trader, up to about $100 per metric tonne. So we thought that if we consolidate the quantities of the BDCs, bring it together, and we do open competitive tenders, we could bring down the cost.
“So we had these discussions, we planned it, and we started in January this year. The first tender that we did in January to deliver quantity starting from March, we got the premium at $30 per metric ton. This is a huge drop. And we see that this is an advantage for us. So with this huge drop in the premium, the cost of importing LPG, this introduction of the $80 per metric ton helps to make it easy to accommodate the price,” Abass Ibrahim Tasunti stated.
This strategic move has resulted in a significant reduction from $100 to $30 per metric ton through competitive tenders, making the $80 fee pivotal in facilitating price adjustments.
The NPA’s actions demonstrate a strategic response to industry demands, ensuring a conducive environment for LPG traders amidst evolving market conditions.
The Liquefied Petroleum Gas (LPG) Marketers Association voiced its concerns regarding the government’s approach to boosting LPG consumption, cautioning that the continual introduction of taxes could impede this objective.
Their statement comes in response to the National Petroleum Authority’s (NPA) recent imposition of a new tax on LPG as part of the revised pricing structure, effective April 1, 2024.
The Association strongly criticized this move, particularly condemning the addition of $80 per metric ton (MT) as part of the suppliers’ premiums, specifically designated for Bottling Plant and Cylinder Investment Margins.
They argued that this imposition was unjustifiable and indicated the Authority’s disregard for the decline in consumption since 2021.
The National Petroleum Authority (NPA) has stated that the Cylinder Recirculation Model (CRM) will be in operation alongside the current distribution model until it is completely phased out.
The Cylinder Recirculation Model (CRM) includes the process of replenishing LPG cylinders at large refilling facilities and then delivering them to consumers through specialized retail stores referred to as exchange points.
During the initial day of implementation, a visit by Citi News to several LPG stations showed that the commencement of the implementation had not yet taken place.
The NPA clarified that the refilling plants are at various stages of completion, causing a delay in the rollout.
Interacting with Citi News, Obed Kraine Boachie, the Head of Gas in Charge of Commercial Regulation at the NPA, indicated that consumers can still visit their LPG filling stations to refill their cylinders until exchange points are established in their communities.
“We are running the whole model side by side with the CRM. This means that you can still go to the refilling station where you have been filling your cylinders all this while and refill your cylinder to whatever quantity you want and take it home. Until you see an exchange point in your local area or vicinity and decide to go there and begin the cylinder exchange. From that point on, any time you are short of gas, you can go to that station and exchange your empty cylinder for a filled one,” he stated.
According to the Authority, it would make sure that OMCs that lift goods supplied under the “gold for oil” scheme pass the price on to customers appropriately.
However, it was observed that the NPA’s control over petroleum product prices was only temporary.
The price at which the BIDECs will sell the products to oil marketing companies (OMCs), according to a statement from the NPA seen by GhanaWeb Business, “will also be approved by the NPA.”
“The applicable exchange rate for pricing the products supplied under G4O will be based on the average rate at which the gold was purchased from licensed gold exporters by the BoG…The BoG ordinarily purchases the gold aggregated by the Precious Minerals Marketing Company (PMMC).
The National Petroleum Authority, in the statement disclosed that Ghana paid US$40 million for about 40,000 metric tonnes of diesel in the first consignment of its gold-for-oil programme.
The gold-for-oil programme is to allow government pay for imported oil products with gold in a direct barter with gold purchased by the central bank.
The move, announced by Vice President, Dr Mahamudu Bawumia will serve as an intervention to help stabilise prices of fuel products, as well as, reduce pressure on Ghana’s foreign exchange.
The first oil consignment arrievd in January 2023.
Below is the full statement by the NPA:
FULL IMPLEMENTATION OF THE GOLD FOR OIL PROGRAMME
1. The implementation of the government’s Gold for Oil (G4O) programme commenced with the arrival of the first consignment of about 40,000 metric tonnes of diesel on January 15, 2023, valued at about US$40 million.
2. The prime objective of the programme is to use additional foreign exchange resources from the Bank of Ghana’s Domestic Gold Purchase(DGP) programme to provide foreign currency for the importation of petroleum products for the country which currently stands at about US$350 million per month.
3. Payment for oil supply is to be done in two channels: by way of barter trade where gold is exchanged for oil or via broker channel where the gold is converted into cash and paid to the supplier.
4. The first consignment of 40,000 metric tonnes of diesel constitutes about 10 percent of the country’s combined monthly demand for petrol and diesel.
5. The plan is to gradually increase imports under G4O to constitute about 50 percent of the country’s total demand for petrol and diesel by March 2023.
6. The implementation of the G4O will ease pressure on the dollar (the currency used for the importation of petroleum products) and avoid the occasional increases in petroleum prices resulting from the depreciation of the cedi against the dollar.
7. The programme will ensure that the cost of importing the products from international oil traders is comparatively cheaper.
8. The consequent reduction in foreign exchange pressures and premiums charged by international oil traders as well as efficiency gains from the value chain will lead to lower ex-pump prices in the country.
9. To ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, the National Petroleum Authority (NPA) will regulate the prices of the products in the interim until the volumes increase significantly.
10. NPA will work with Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with international oil traders to ensure that the landed cost of products procured under the programme are always competitive.
11. The price at which BOST will sell the products to Bulk Import, Distribution, and Export Companies (BIDECs) will be approved by the NPA. The price at which the BIDECs will sell the products to Oil Marketing Companies (OMCs) will also be approved by the NPA.
12. The applicable exchange rate for pricing the products supplied under G4O will be based on the average rate at which the gold was purchased from the licensed gold exporters by BoG. The BoG ordinarily purchases the gold aggregated by the Precious Minerals Marketing Company (PMMC)
13. The NPA will put measures in place to ensure that OMCs that lift products supplied under the G4O programme pass the price on to consumers accordingly. In this respect, BIDECs and OMCs who lift and supply G4O products will sell at the ex-refinery and ex-pump prices that will be determined by the NPA. If there must be a comingling of products supplied under G4O and other sources, the ex-refinery and ex-pump prices will be computed using a weighted average.
14. All BIDECs and OMCs who wish to purchase products under the G4O programme will be required to sign off an undertaking confirming their willingness to comply with the terms and conditions for partaking in the purchase and sale of G4O products.
The NPA claims that this will result in cheaper ex-pump prices across the nation.
The NPA said in a statement released yesterday in Accra that it would collaborate with the Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with the world’s oil traders in order to guarantee that the landed cost of goods purchased through the program always complies with competitive standards.
The statement said all Bulk Import, Distribution, and Export Companies (BIDECs) and Oil Marketing Companies who wish to purchase products under the G4O programme would be required to sign off an undertaking confirming their willingness to comply with the terms and conditions for partaking in the purchase and sale of G4O products.
The implementation of the government’s G4O programme which commenced with the arrival of the first consignment of about 40,000 metric tonnes of diesel on January 15, 2023, valued at about US$40 million.
The first consignment of 40,000 metric tonnes of diesel, the statement explained constituted about 10 per cent of the country’s combined monthly demand for petrol and diesel and is expected to gradually increase imports under G4O to constitute about 50 per cent of the country’s total demand of petrol and diesel by March 2023.
The statement stated that the implementation of the G4O would ease pressure on the dollar (the currency used for the importation of petroleum products) and avoid the occasional increases in petroleum prices resulting from the depreciation of the cedi against the dollar.
It said the programme would ensure that the cost of importing the products from international oil traders would be comparatively cheaper, adding “payment for oil supply is to be done in two channels by way of barter trade where gold is exchanged for oil or via broker channel where the gold is converted into cash and paid to the supplier.”
The statement said the consequent reduction in foreign exchange pressures and premiums charged by international oil traders as well as efficiency gains from the value chain would lead to lower ex-pump prices in the country.
The NPA explained that “all these would ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, the National Petroleum Authority (NPA) will regulate the prices of the products in the interim until the volumes increase significantly.”
“The price at which BOST will sell the products to bulk import, distribution, and export companies (BIDECs) will be approved by the NPA and the price at which the BIDECs will sell the products to oil marketing companies (OMCs) will also be approved by the NPA,” it added.
Oil Marketing Companies (OMCs) in the country owe the government more than ¢400 million, Dr Mustapha Abdul-Hamid, the CEO of the National Petroleum Authority (NPA), has stated.
The debts, he said are in the form of taxes stressing it was rather unfortunate that “the OMCs don’t want to pay taxes.”
Dr Abdul-Hamid said this when he inaugurated the newly refurbished 60-seater capacity conference hall of the Bono Regional Coordinating Council (RCC) in Sunyani, funded by the NPA through the Authority’s Corporate Social Responsibility fund.
He said although God had blessed the country, the bad attitudes of many Ghanaians remained the bane of the socioeconomic development of the nation.
“Change of attitude is required if we can build our nation,” Dr Abdul-Hamid stated, saying “we all have no choice but to contribute as little as we can because individual commitment is needed towards the holistic development of the nation.”
Comparing Ghana to other advanced countries, he said it would be a sign of ingratitude to “God and our forefathers if Ghanaians continue to speak ill of a country which offers all levels of education partially free to our people”.
“So, let’s all try and change our attitudes and rededicate ourselves to the development of our country because everybody, including the clergy, chiefs and queens, politicians and academia, has our share of running the country down.”
The Bono Regional Minister, Justina Owusu-Banahene expressed appreciation to the Management, Board and entire staff of the NPA for renovating the conference hall, which she added was left to deteriorate.
“The renovation of the conference hall is a testament of the good work of the NPA and for that matter Dr Abdul-Hamid,” she indicated, saying the facility had now been put in good shape to facilitate effective work of the RCC.
He emphasized that the fact that “the OMCs don’t want to pay taxes” was regrettable and that the debts were in the form of taxes.
When he opened the newly renovated conference room for the Bono Regional Coordinating Council (RCC) in Sunyani, which had been paid for by the NPA through the Authority’s Corporate Social Responsibility fund, Dr. Abdul-Hamid made this statement.
“Change of attitude is required if we can build our nation,” Dr. Abdul-Hamid stated, saying “we all have no choice but to contribute as little as we can because individual commitment is needed towards the holistic development of the nation.”
Comparing Ghana to other advanced countries, he said it would be a sign of ingratitude to “God and our forefathers if Ghanaians continue to speak ill of a country which offers all levels of education partially free to our people”.
“So, let’s all try and change our attitudes and rededicate ourselves to the development of our country because everybody, including the clergy, chiefs and queens, politicians and academia, has our share of running the country down.”
Madam Justina Owusu-Banahene, the Bono Regional Minister, expressed appreciation to the Management, Board and entire staff of the NPA for renovating the conference hall, which she added was left to deteriorate.
“The renovation of the conference hall is a testament of the good work of the NPA and for that matter Dr. Abdul-Hamid,” she indicated, saying the facility had now been put in good shape to facilitate effective work of the RCC.
The much-discussed Cylinder Recirculation Model (CRM) will be completely operational by the first quarter of 2023, according to the National Petroleum Authority (NPA).
The NPA claims that this is done to stop the operations of gas stations that are related to the gas explosion at Atomic Junction in the Greater Accra Region.
The Liquified Petroleum Gas (LPG) station at Atomic Junction in the Madina Constituency of the Greater Accra Region experienced a large-scale explosion on October 7, 2017, when a petrol truck discharging products at the state-owned Ghana Oil Company (GOIL) station caught fire.
The Chief Executive Officer (CEO) of NPA, Dr Mustapha Hamid announced the phasing out of the gas filling stations at a press soiree held in Accra.
The Chamber of Petroleum Consumers Ghana(COPEC-GH) wants government to as a matter of urgency address pending Liquefied Petroleum Gas (LPG) issues with industry players to restore the supply of the product in the country.
It said the Ghana National Tanker Drivers Association (GNTDA); Liquified Petroleum Gas Marketing Companies (LPGMCS) and the Ghana Liquefied Petroleum Gas Operators Association (GLIPGOA) had withdrawn their services effective yesterday because their concerns had lingered for a long.
A statement issued in Accra yesterday by COPEC Executive Secretary, Duncan Amoah, said consumers would continue to bear the brunt as all LPG outlets remain non-operational.
It said the concerns of the industry players included general welfare and a ban on all new LPG sites which has affected their operations and finances over the past five years.
According to COPEC, the strike by GNTDA which energized the others to join, followed unsuccessful attempts by the group to get their issues resolved both by the Ministry of Energy and the National Petroleum Authority (NPA).
Touching on the genesis of the problems, it said after the Atomic gas explosion about five years ago, the NPA under its former Chief Executive, HasanTampuli, directed the freezing of the permits of a number of stations under construction.
“Several years down the line and this ban is yet to be lifted thereby leaving the various companies who had invested heavily in the construction of these retail points heavily debt distressed as they are constantly harassed by their banks and other finance entities who had advanced various loans to put up these stations,†it said.
According to COPEC, the ban had led to about 11 per cent reduction in volumes for the operators over the past one year instead of a projected 15 per cent increase year on year.
The statement said efforts by actors within the LPG space to get the issues resolved had all proven futile because authorities do not seem to understand the pressures the operators were going through.
“We call on the NPA under the leadership of Dr Mustapha Hamid to ensure a speedy resolution of the deadlock between the operators and authorities to ensure the immediate reopening of these outlets across the country.
“We further call on the Energy Ministry to ensure all grievances of the various operators within the LPG space are attended to forthwith without fail as the looming pressures on the Ghanaian LPG user could only exacerbate with further delays in addressing these challenges,†it said.
The Head of Consumer Services at the National Petroleum Authority (NPA), Eunice Budu Nyarko, has appealed to the public to purchase fuel only from filling stations with certification.
She said stations with green Ghana Standards Authority (GSA) stickers were always the go-to places for petroleum products, since those stations were regularly monitored by the NPA and, therefore, the quality of their products could be guaranteed.
During a public sensitisation exercise in the Central Region, Mrs Budu Nyarko also stressed the importance for consumers of petroleum products, such as liquefied petroleum gas (LPG), to be conscious of their safety.
The NPA is on a nationwide drive to sensitise key users of petroleum products, such as drivers, traders, micro, small and medium enterprises, as well as fuel retail outlets, to safety, quality and proper use of products.
The exercise, which is being undertaken by a team from the national and the regional offices of the NPA, has seen the team engage traders, pedestrians, commercial drivers, as well as fuel retail outlets. In Cape Coast, the team visited the Tantre Lorry Station, the Kotokuraba Market and taxi station, the Abura Market, among other areas.
Cylinders Mrs Budu Nyarko cautioned the public against placing LPG cylinders, both empty and filled, near naked fi res or inflammable liquids. She noted that that act had the potential to cause fi re outbreaks which could result in the loss of lives and properties.
She underscored the need for users of petroleum products to adhere to all safety protocols because the flouting of laid down regulations had the potential of igniting fire outbreaks at home and workplaces.
Complaints
The Central Regional Manager of the NPA, David Owusu Kena, said the exercise was to educate and create awareness among consumers of petroleum products due to a number of complaints concerning dissatisfaction with the kind of services they got at the pumps.
According to him, although the NPA was sensitising consumers of petroleum products to how to handle such cases safely, the exercise was for consumers to approach the NPA for their complaints to be addressed within the shortest time. On suspected cases of under delivery, Mr Kena said “so far at the stations that we have tested, their volumes with the 10-litre can have no form of under-deliveryâ€.
The regional manager said the NPA had been carrying out monthly, as well as random, checks to ensure that fuel retail outlets did not shortchange consumers through underdelivery and sale of substandard petroleum products.
Mr Kena urged consumers to have more confidence in the NPA, noting that that had been a challenge because some consumers thought the authority was in bed with petroleum service providers.
