Downstream petroleum industry value hits GH¢71 billion in 2023

The domestic downstream petroleum industry amassed a monetary value exceeding GH¢71billion in 2023, contributing approximately 8.4 percent to the country’s Gross Domestic roduct (GDP) according to Dr. Mustapha Abdul-Hamid, Chief Executive Officer-National Petroleum Authority (NPA).

With over 3,000 service providers, the sector predominantly features high local participation and annually delivers over 4 million metric tonnes of petroleum products.

He also noted that the industry has returned an average annual value of over GH¢35billion over the past seven years.

“Increased private sector participation has transformed the petroleum downstream industry into a vibrant and dynamic sector, playing a crucial role in the economy’s growth and development,” he added.

In 2023 the industry experienced a 6.4 percent rise in petroleum product consumption, reaching 4.49 million metric tonnes after recovering from a 9.0 percent decrease in 2022. Meanwhile, consumption, he said, is projected to further recover in 2024, approaching the peak of 4.64 million metric tonnes recorded in 2021.

The CEO of NPA, who was speaking at the Ghana International Petroleum Conference 2024 (GHIPCON) opening session in Accra, further indicated that the country’s downstream petroleum industry serves as a key supplier to neighbouring countries including Mali, Niger, Côte d’Ivoire, Togo and Burkina Faso.

The volume of petroleum products re-exported and transited to these nations totalled 385,154,100 litres in 2023. It is against this backdrop that he highlighted the increase in export volumes as a testament to the NPA’s successful efforts in curbing illicit fuel activities.

Additionally, he announced that Senegal and Gambia have started importing petroleum products from Ghana – expanding the sector’s regional influence.

“The NPA recognises the vibrant and dynamic nature of our industry and is committed to formulating and implementing innovative strategies and policies that will ensure the industry remains efficient and profitable, and at the same time ensure consumers get the best value for money,” he said.

According to Dr. Abdul-Hamid, pricing reforms have transitioned from annual regulated prices to a transparent daily deregulated price adjustment formula – noting that Ghana is among the few African countries consuming low sulphur fuels with imports typically below 50ppm, and has declared zero-tolerance for toxic fuels.

He said the NPA’s technology-driven initiatives, such as the Petroleum Products Marking Scheme and Bulk Road Vehicle Tracking project, have enhanced the monitoring and integrity of petroleum product quality and quantity.

The Cylinder Recirculation Model (CRM) of LPG distribution currently being rolled out in the Greater Accra Region, he asserted, aims to deliver LPG to consumers more safely and efficiently, and he used the occasion to appeal for industry players to accept this new model.

However, he mentioned that challenges persist – particularly with illicit activities within the sector. For instance, he said, in 2023 the NPA retrieved 889,650 litres of diverted and smuggled petroleum products, imposing sanctions on offending Petroleum Service Providers (PSPs).

The Ghana International Petroleum Conference (GhIPCon) 2024 edition is being held under the theme ‘The Petroleum Downstream: Building a Future for Growth, Efficiency, and Sustainability’.

The two-day event is being organised by the NPA in collaboration with the Ministry of Energy, together and partners including the Chamber of Bulk Oil Distributors (CBOD) and Association of Oil Marketing Companies (AOMC).

This year’s event has the overall objective of addressing critical issues and exploring opportunities within the petroleum downstream sector.

Minister of State for the Ministry of Energy, Herbert Krapa, speaking on behalf of Vice President Dr. Mahamudu Bawumia, noted that the African Continental Free Trade Area (AfCFTA) presents unprecedented opportunities for the petroleum downstream industry.

“By removing trade barriers and fostering regional integration, AfCFTA can enhance market access, stimulate investment and drive economic growth. We must capitalise on these opportunities to strengthen our industry and promote sustainable development across the continent,” he stated.

He said government is committed to increasing Ghanaians’ participation in all segments of the downstream petroleum value chain. “And so, we will continue to promote and explore policies that enhance Ghanaian content, support capacity building and create opportunities for the Ghanaian people.

“That way, we can guarantee the benefits of our resources are widely shared, while ensuring the development of our local workforce and businesses.”

He also advocated for the creation of a long-term strategy for foundational change that considers sustainability in every process; and the use of data to influence decisions on implementing sustainable practices at the design, engineering and manufacturing stages to track, measure and reduce emissions every step of the way, among others.