Ghana: LPG Import Policy Reviewed…Prices Set To Drop

Ghana’s petroleum downstream regulator,  National Petroleum Authority (NPA) has reviewed the mode of Liquefied Petroleum Gas (LPG) importation in the West African nation by making it go through open competitive bidding process.

The NPA says the decision to use open competitive tenders for the importation of LPG is to reduce cost and ensure efficiency.

According to the regulator,  it held a successful maiden competitive bidding on Monday, 29th January 2024.

NPA said the winning tenderer submitted the lowest premium of USD30.39/MT for the four (4) Lots that were tendered for the period March to June 2024.

This is a significant drop from the current premiums which range between USD67/MT to USD98/MT. Each lot is about 20,000 metric tonnes.

In a release, NPA said the proposal for the open competitive tenders was approved after consultation with Bulk Import, Distribution and Export Companies (BIDECs) with a majority of them supporting it.

The Authority indicated that the quantity being tendered per month represents about 70 percent of Ghana’s monthly LPG consumption with the Ghana National Gas Company (GNGC) supplying the remainder.

It is recalled that the NPA proposed the use of Open Competitive Tenders for the importation of LPG in 2021, to among other things, bring efficiency to the importation of LPG into Ghana and ultimately reduce the cost of LPG through competition.

This was one of the measures proposed to help reduce the cost of LPG to aid in the implementation of the Cylinder Recirculation Model (CRM), which has affordability as one of the key tenets to successfully implementing the policy.

The proposal was thoroughly discussed in-house to assess its feasibility, and after it was concluded that it would help reduce the cost of importing LPG, approval was granted to engage with the BIDECs to get their buy-in before its implementation.

There were several engagements with BIDECs throughout 2023.

These engagements resulted in the majority of BIDECs supporting the proposal, despite some reservations from a few of them.

The Authority considered the concerns raised by those with reservations and concluded that they were not strong enough to prevent the implementation of the policy.

Data available to the Authority on LPG imports by BIDECs over the years shows a huge disparity in the premiums paid to the International Oil Trading Companies (IOTCs).

This can be attributed to the smaller parcels of LPG imported by the BIDECs.

The Authority is of the view that importing the LPG in bulk through the tender process will help to reduce the premiums due to economies of scale and further bring efficiency to the importation of LPG.

The high cost of LPG is a  major concern to both LPG buyers and retailers.

Checks by this portal indicate that LPG consumption in 2021 was 345, 477,075 kilogrammes while in 2022, consumption was 305,076,209 kilogrammes.

Data sourced from NPA website shows that between January to October 2023, LPG consumption was around 259,375,659 kilograms.

Source:https://energynewsafrica.com/