The Chamber of Petroleum Consumers (COPEC) and Consumer Protection Agency (CPA) have sued the National Petroleum Authority over the introduction of the Cylinder Recirculation Recovery Margin which will allow LPG operators to start charging 13.5 pesewas for each kilogram of LPG.
The two companies in their writ of summons argue among others that the NPA failed to consult with various stakeholders before introducing the policy.
“Plaintiffs state that the failure of the 1st defendant to consult with the service providers before the introduction of the new petroleum pricing formula has led to agitations among such service providers, particularly, the LPG Marketing Companies Association of Ghana (LPGMCs) who have issued a statement calling on the 1st defendant to withdraw the CRM.”
The plaintiffs are thus seeking a declaration that the Cylinder Recirculation Recovery Margin be declared unlawful on grounds that the Chief Executive Officer (CEO) of NPA, Hassan Tampuli failed to consult the NPA Board before introducing the policy.
“A declaration that the failure of the 2nd Defendant to secure the approval of the 1st Defendant board before announcing the new LPG cylinder recovery margin was unlawful,” portions of the writ said.
Purpose of Cylinder Recirculation Model
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.
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.
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the NPA has justified the move, some industry watchers have however said that both directives are unlawful and must be withdrawn with immediate effect given the impact it will have on the business.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 its 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.