LPG marketing companies oppose new tax by NPA

The LPG Marketing Companies Association of Ghana has described as insensitive the imposition of a new levy pegged at $80 per metric ton on LPG effective April 1, 2024.

In a statement dated April 15, 2024, the association said the decision by the National Petroleum Authority (NPA) to impose the new tax through the Fees and Charges (Miscellaneous Provisions) Regulations 2023 (LI2481) is an abuse of the law.

“The LPG Marketing Companies Association of Ghana strongly condemns, in no uncertain terms, the National Petroleum Authority (NPA)'s decision to impose a new levy of $80 per metric ton on LPG, effective April 1st, 2024. The truth is, the Fees & Charges (Miscellaneous Provisions) Regulations 2023 (LI2481) are being seriously abused by the NPA. It is therefore crucial that the Ll is either withdrawn or reviewed promptly for the benefit of the petroleum industry and consumers. As it stands, these regulations provide a loophole for the NPA to introduce new high levies and taxes at will, which could be done capriciously as in the case of this $80/metric ton slapped on the product on the 1st of April, 2024,” the statement said.

While accusing the NPA of burdening the consumer with the new tax, the group raises concerns about the objective of the Authority which the Association believes contradicts the government’s goals.

“It is worth noting that when the Price Stabilization and Recovery Levy (PSRL) was publicly withdrawn, the NPA replaced it with the $80 per metric ton levy, essentially replacing fourteen Ghana pesewas (GHC0.14) with one cedi twenty pesewas (GHC1.20). Unfortunately for the poor consumer, the price stabilization levy was reintroduced less than one week after its removal, escalating the pump price of LPG further. This manoeuvring ultimately deceived the consumer, especially those with lower incomes. This pattern raises serious concerns that the NPA's objectives sharply contradict the government's goals, particularly since the attempted introduction of the Cylinder Recirculation Module (CRM) in 2017.

“Previously, the government's policy aimed to ensure that by 2030, 50% of Ghanaians would have access to Liquefied Petroleum Gas (LPG), was seeing some progress. However, the continuous imposition of taxes on LPG contradicts government objectives and has stalled growth in the sector. Indeed, the statistics shows that consumption of LPG in Ghana is on a serious decline since we hit our peak in 2020 and 2021 as a result of high taxes and levies which have resulted in a higher pump price. This is pushing a lot of people from consuming LPG and are resorting to the use of charcoal and wood fuels, the consequences of which are dire to our survival as humans,” the group said.

The new tax amounting to $2.2 million a month according to the Association will largely contribute to the already declining use of LPG.

While demanding answers to some of their concerns, the Association called on the NPA to completely withdraw the tax to avoid “hindering investment, discouraging competition, overburdening poor consumers with higher prices of LPG which will lead to the eventual collapse of the LPG downstream industry, one of the very few locally owned industries surviving in Ghana currently.”