Time to review LPG policy

....Panellists declare

By Liberty Amewode, The Business Analyst

The time has come for the government to review Ghana’s policy on the consumption of Liquefied Petroleum Gas (LPG) to align it with current trends, speakers at a forum in Accra last Thursday have stated.
According to them, the recurrent shortage of the product being experienced lately is a result of what some of them described as an outmoded policy presently governing the sector.
Speaking at the forum on improving LPG supply, organized by the Research and Advocacy Platform (RAP), a political advocacy group, an Energy Consultant, Dr. Kwabena Donkor, said the policy on LPG had never been reviewed to accommodate the rise in demand that is currently being witnessed.
“The country has failed to update the LPG policy, making it outmoded”, he stated.
He said the shortage of the product should also be viewed from the increase in its usage and pointed out that with the commodity now becoming a transportation fuel for commercial vehicles, government subsidy, which was meant to encourage domestic use, could no longer be sustained.
He therefore called for an all-inclusive committee to discuss the LPG shortage from a national perspective to make the commodity available to consumers and tasked the media to take up the policy issue and pursue the appropriate authorities to come out with a new policy to address the shortage.
Dr. Donkor, who once headed the Bulk Oil Storage Transport (BOST) company, was of the view that as it stands now, the subsidy on LPG was benefiting only those in the urban areas, to the exclusion rural folks, and called for it to be revisited. “Can we imagine the number of schools and other infrastructure that the huge monthly subsidy of close to GHC15 million can be used for?” he asked.
He said LPG has moved from being a social product to an economic product from which a few Ghanaians are reaping super profits and called for the continuous subsidy to be reconsidered.
“Subsidy is good, and I am all for subsidy. But mis-targeted subsidy is a disaster”, he declared.
Taking his turn, the Acting Chief Executive Officer of the National Petroleum Authority (NPA), Mr. Alex Mould, noted that more than 60 per cent of LPG distributed in the country is used by commercial vehicles.
He said available statistics indicated that LPG usage nation-wide showed Greater Accra Region consumption of 39 per cent, Ashanti Region 19 per cent, Western Region 11 per cent, Central Region nine per cent, and Volta Region 6.7 per cent, while Northern, Upper East and West Regions together consume a total of less than three per cent.
Mr. Mould said it was going to be tough for government to sustain the subsidy on gas, adding that there was the need to adopt measures that will address the situation.
Interim Measures
As an interim measure, he said, government is spending about GHC 12.5 million every month on subsidizing LPG ‘and that has been for the first half of the year’, adding that if the trend continued, then the government will have to cough up more than GHC15 million.
That he said was due to the fact that the amount of LPG being imported has been increasing.
He revealed that the Tema Oil Refinery (TOR) is hoping to increase the metric tonnage of LPG from 15,000 metric tonnes to about 20,000 metric tons for the month of August and to 24,000 metric tonnes for the month of September.
“Our next vessel comes in on the 22nd of August 2011. We are expecting 14,000 metric tonnes, this will be discharged in somewhere close to 8-9 days”, he said.
The NPA boss however expressed concern about the lack of facilities at the TOR, particularly the single jetty and pipelines as well as LPG storage facilities, adding that that was also contributing to the current shortage of the product in the country.
“We have to invest and revamp the pipeline; we have to build another pipeline from the jetty, all the way to the Tema Oil Refinery, an 8 inch or 9 inch pipeline so that we can increase the trough so that a larger vessel can come in and supply more LPG to the refinery,” he advocated.
Mr. Mould added that as an institution, the NPA is also instituting some measures such as considering if it can bring in a vessel to discharge the product directly into the bulk road vehicles in Takoradi, adding that “we have people in Takoradi who have already been to Cotonou (Benin) to see how they are doing it”.
He reminded vehicle owners who are using LPG to fuel their cars that although LPG is quite good for vehicles, it is not the most efficient fuel to be used.
The NPA boss further outlined the various policy options available for dealing with the situation in the medium and long-terms.
Over Politicisation
The Convention Peoples Party (CPP) spokesperson on energy Mr. Kwame Jantuah, in his remarks, said it was important that issues affecting the nation are discussed without partisan considerations.
He congratulated RAP for the forum and called for more of such fora when national interest issues are concerned.
A Consumer Rights Advocate, Kofi Kapito, for his part, said all that Ghanaians need is the availability of the product in the market for them to buy.
He compared the situation to an addict who has been introduced to drugs and having been hooked on it, cannot get the drugs to buy.
“Ghanaians are now hooked on gas and so they cannot be weaned off the product”, he said and blamed the situation on the lack of planning, adding that it was unfortunate that ‘we could not envisage that demand will increase so that we would also raise supply’.
For him, the environment was benefiting when the cars use gas and therefore they must not be discouraged, adding that special provisions should be made for them.
“Whatever the government will do to solve the problem, it should do it”, he stated, and condemned the over-politicisation of many issues in the country, including the LPG issue.
A former minister in the previous NDC regime, Mr. Sam Pee Yalley, who chaired the function, suggested that vehicles who use LPG be charged higher insurance premiums since the product they use was more dangerous to the passengers they carry.
He is of the view that in that way, the taxes and levies on petrol and diesel, which such commercial vehicles avoid paying, would be recouped by the country.
During question and comment time, some participants also pointed fingers at restaurant operators for also using the product on commercial basis.
The spokesperson for RAP, Felix Kwakye Ofosu, speaking to The Business Analyst regretted what he described as the “irresponsible manner” in which some opposition elements had sought to use “this national challenge to pursue a narrow partisan agenda,” and urged all to offer useful alternatives to address the problem “rather than the usual empty rhetoric” that has characterized their interventions on every National issue, including the LPG problem.
He acknowledged various views already expressed and proposals offered, including the potential removal of subsidies on LPG, banning commercial vehicles from using LPG among others, saying RAP created the platform for a deeper understanding of the situation to inform the eventual policy choice to be made.
Also present at the forum were the Deputy Ministers of Energy, Information and Environment, Science and Technology, Mr. Emmanuel Armah-Kofi Buah, Samuel Okudzeto Ablakwa and Dr. Edward Omane Boamah respectively.
Meanwhile, The Business Analyst has gathered that a special Cabinet sub-committee continues to study the various options towards reviewing the policy to make availability of the product more sustainable.
The options available include a total removal of the subsidy on LPG to make it unattractive to commercial drivers, at a price that will still make it cheaper than alternative fuel for domestic users such as charcoal.
There have been discussions also of introducing a price differentiation regime which allows for domestic users to continue benefiting from the existing subsidy, while commercial vehicles buy at economic prices.
That option, however, presents its own challenges of monitoring and enforcement.
There is also the option to boost supply through direct supplies from barges to supply vehicles, which require the dredging of either the Tema or Takoradi Ports to accommodate the vessels.