Business News of Thursday, 1 February 2018
The Ministry of Energy has directed the National Petroleum Authority (NPA) to review the ban imposed on the construction of fuel filling stations in the country.
However, the review does not include Liquefied Petroleum Gas (LPG) distribution outlets.
Energy Minister Boakye Agyarko announced this at the opening of the NPA’s colloquium on the theme “Ghana’s Petroleum Downstream – Then, Now and the Future,” in Accra yesterday.
It will be recalled that in October last year, government imposed a ban on the construction of fuel filling stations until further notice following the massive explosion at an LPG filling station at Atomic Junction that claimed seven lives and injured several others.
250 people die from gas explosions
Figures available indicates that over 250 people have died from gas explosions since the year 2007.
Agyarko said government through the ministry and NPA is taking steps focused on transforming the downstream sector from its present state towards achieving government’s vision of making Ghana a hub for refined petroleum products in the West Africa sub-region.
“A refined petroleum products hub shall involve the introduction of new players in the import and export sub-sectors, infrastructure development and expansion, health, safety, and security issues and other activities,” he added.
New Downstream Petroleum Act
He explained that it would be necessary to introduce a new Downstream Petroleum Act that shall encompass the hub concept which would among others things incorporate licensing and permitting regime, re-alignment of mandate of the regulator, construction and operation of downstream facilities and tariffs and charges for use of downstream petroleum infrastructure.
In a speech read on behalf of the Vice President, Senior Minister Yaw Osafo-Maafo said the sector has over the years contributed significantly to the growth and development of the economy.
Petroleum downstream industry contributes 10 % of GDP
He added that between 2013 and 2016, the petroleum downstream industry is estimated to have contributed GH?46 billion to the country’s Gross Domestic Products (GPD) which represents an average of 10 % per annum.
The role of private sector
He said the involvement of the private sector in the importation of crude oil and refined petroleum products has significantly supplemented Tema Oil Refinery’s (TOR) production, minimized the government’s involvement in procuring or financing the petroleum product requirements of the country.
This, he explained has made more resources available for other developmental projects and programmes adding, “It is with great joy to note that TOR has resumed production after a yearlong maintenance of the refinery.”
Osafo-Maafo said Ghana’s downstream oil industry was vital to the economy, adding that currently, over 70% of Ghana’s commercial energy needs were supplied through petroleum products.
“The NPA estimates a 5% growth for petroleum products consumption in 2018. This has the potential to grow at a much higher rate if significant investments are made in infrastructure,” he said
Downstream Petroleum Infrastructure Masterplan
He added that government was currently developing a Downstream Petroleum Infrastructure Masterplan, aimed at enhancing the pace of infrastructure sourcing with a regional context in mind.
50% of Ghanaians to have access to LPG
Osafo-Maafo noted that it is government’s objective to ensure that 50% of Ghanaians have access to safe and environmentally friendly LPG for commercial, industrial and domestic use by 2020.
He indicated that an implementation strategy based on the cylinder recirculation model was currently being developed by a committee comprising of key stakeholders.
Domestic tax on MGO
Alhassan Tampuli, Chief Executive Officer (CEO) of NPA justified the decision to apply domestic taxes on Marine Gas Oil (MGO) sold to foreign vessels as part of measures to streamline tax avoidance by sector players.
GH?18m tax revenues lost
According to him, the government lost GH?18 million in tax revenues from MGO leakages through illegal activities last year.
Dumping cost GH?850m
Additionally, he said export dumping also caused the nation over GH?850 million in 2017.
For these reasons, he said, the NPA in collaboration with the Ministry of Energy and Finance would continue to put in place stringent measures to drastically reduce the leakages in the system.
“These measured are aimed at removing the economic incentive to cheat the system and are seen to be yielding results. MGO foreign for instance has reduced from 20 million litres a month to 290,000 litres a month based on the Authorities preliminary estimates,” he said.
Plugging the supply leakages
Tampuli noted that NPA plans to intensify activities towards plugging the supply leakages, in order to consolidate the gains been made and to make the industry more efficient.
“We intend to roll out the second phase of the LPG refilling plant safety risk assessment. The exercise will take into consideration the location and human density around the stations, among others,” he added.
He indicated that this would lead to decommissioning of high-risk stations and their subsequent conversion into cylinder distribution centres under the new LPG policy, adding that low-risk stations would be considered for autogas refilling only.
Tampuli pointed out that the NPA recognizes the vibrant and dynamic nature of the industry and was committed to formulating and implementing innovative strategies and policies to ensure that the industry remains efficient and profitable.