04.04.2020 Oil and Gas

COPEC, CPA To Sue NPA Over New LPG Levy

COPEC, CPA To Sue NPA Over New LPG Levy
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The Chamber of Petroleum Consumers Ghana (COPEC) and the Consumer Protection Agency (CPA) have threatened to sue the National Petroleum Authority (NPA) over the introduction of the Cylinder Recirculation Recovery Margin.

The new levy will allow LPG operators to start charging 13.5 pesewas for each kilogram of LPG.

According to the NPA, the introduction of the Cylinder Recirculation Recovery Margin is to support stakeholders in the supply chain ahead of the implementation of the Cylinder Recirculation Model.

The companies in a letter signed by their lawyer, Martin Kpebu, however, called for an immediate withdrawal of the margin, saying t was not approved by Parliament.

“It has come to the attention of my clients that the NPA has imposed a new levy/tax on petroleum products effective 2nd April, 2020, without the approval of Parliament. As you are already aware, the CIM for all intents and purposes amounts to a tax as such the NPA required the approval of Parliament in order to impose same. We humbly wish to draw your attention in this regard to article 174(1) of the Constitution (1992).

“My client has therefore instructed me to and I do hereby demand that upon receipt of this letter, you cease immediately with the unlawful collection of the cylinder investment margin. Take notice that should you fail to heed to our demand. I have my client’s instruction to bring an action against you in a court of competent jurisdiction to compel you to do so and for costs including solicitor’s fees, without further notice to you.”

The NPA on Wednesday, April 1, 2020, directed industry players to begin 13.5 pesewas charge on each kilogram of LPG.

It also instructed Oil Marketing Companies to increase the levy on Fuel Marking Margin from three pesewas to 4.5 pesewas per litre on every product.

Although the NPA has justified the move, some industry watchers have however said that both directives are unlawful and must be withdrawn with immediate effect given the impact it will have on the business.

NPA in the latest release issued on Friday, April 4, 2020, maintained that such calls are unfortunate because its projection rather shows that for this very pricing window (1st April to 15 April, 2020), consumers are expected to enjoy a price reduction of about 11.56 percent even with the introduction of the Cylinder Recovery Margin.

“The attention of the National Petroleum Authority (NPA) has been drawn to a statement issued by the LPG Marketing Companies Association of Ghana (LPGMCs) on the above subject, dated April 3, 2020, calling for the withdrawal of GHp 13.5 Cylinder Recovery Margin which took effect on April 1, 2020. We wish to state categorically that, contrary to their claim that the introduction of the margin will increase the product price at the pumps and thereby burden the consumer, the facts as they stand do not support that.”

“The margin is, therefore, to assist the marketers to offset some of their financial expenses, in accordance with the full cost recovery principle of petroleum products pricing in Ghana. It is therefore unfortunate for the LPGMCs to hold such a position”, it added.

The NPA says it will continue to engage in this and other related issues of mutual concern over the concerns raised regarding tax components on LPG.

“We are certainly aware of the difficult situation we all find ourselves in at this time, and the last thing we will do is to further burden the consumer with additional taxes. The NPA would, therefore, like to assure members of the general public of our commitment to ensure product availability, affordability, and accessibility, while ensuring the safety of the general public and the business viability of players across the value chain”, the statement concluded.


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