Ghana LPG Marketers upset by new levy

Ghana’s Liquefied Petroleum Gas Marketers Association (LPG Marketers Association of Ghana) is criticising new policies from the National Petroleum Authority (NPA) that it’s members believe harm the industry.

The main point of contention is an $80 levy imposed on each metric tonne of LPG by the NPA. This levy is supposedly to fund a cylinder recirculation programme.

The LPG Marketers Association, represented by Vice President Gabriel Kumi, questions the rational. “I am not too sure how this fund is going to be disbursed. And we are not too sure if it is right for the NPA to even accumulate such a fund collect levies from consumers and use that fund to support private businesses to set up bottling plants”.

The LPG Marketers argue that this levy will only worsen the industry’s problems. They highlight that the industry directly employs 7,000 people. “We believe the timing is so wrong and we will appeal to the NPA to take a second look at it, withdraw those levies immediately and to give customers a respite. The LPG marketing companies, most of them are on the verge of collapse. Those surviving are doing so on the edge”, according to Gabriel Kumi.

The association finds it contradictory that the government aims to increase LPG usage to 50% by 2030, yet implements a levy that discourages consumption. “The imposition of the $80 levy per metric tonne of LPG is going to add some GHC1.20 to each kilogram of the product purchased at the pumps. That further translates LPG price moving from GHC14.00 in the previous pricing window to GHC15.20 in the current window. Unfortunately for the past two weeks the cedi has not performed well and that was already going to add GHC1.00 to the pump price bringing it to GHC16.20 per kilogram of LPG.

The LPG Marketers Association of Ghana points to past data:

• In 2020, LPG consumption was around 332 million kilograms.
• Consumption rose to 345 million kilograms in 2021 when LPG prices fell.
• Conversely, consumption dropped to 305 million kilograms in 2022 when prices rose again.
• In 2023, consumption partially recovered to 318 million kilograms but remained below 2021 levels.

This trend suggests that price directly affects LPG consumption in Ghana. The association likely fears the levy will push prices up and hinder the government’s goal of increased LPG usage.

By Eben Agyekum-Boateng, 3Business