New NPA bill proposes $80 LPG levy to fund cylinder recirculation

A new National Petroleum Authority (NPA) Bill, yet to be laid before Parliament, is expected to introduce major reforms to petroleum pricing and funding structures, including the introduction of an $80 levy on every metric tonne of Liquefied Petroleum Gas (LPG) to finance Ghana’s Cylinder Recirculation Model.

NPA Chief Executive Officer Edudzi Tamakloe disclosed the proposals while outlining ongoing stakeholder consultations on the draft legislation, which he described as part of efforts to streamline petroleum levies and improve efficiency in the downstream sector.

According to him, the bill also seeks to merge existing funding mechanisms into new consolidated structures to improve transparency and cost recovery in the industry.

“In the new NPA Bill, I usually call it the ‘NPA Bill’, it tries to bring two things together — the UPPF and the PDM,” he explained. “The UPPF and the PDM will now be what is called the Distribution Fund.”The UPPF (Unified Petroleum Pricing Fund) and the Primary Distribution Margin (PDM) currently serve as separate components used to absorb costs associated with fuel distribution and logistics in the downstream petroleum sector.

Mr Tamakloe said under the proposed reforms, these funds will be merged to improve coordination and ensure more efficient management of petroleum pricing structures.

He added that another key component of the bill is the creation of an infrastructure-focused fund to support strategic investments in the sector.

“The BOST margin, among others, will go into what is now known as the Infrastructure Fund,” he noted, referring to the margin associated with the Bulk Oil Storage and Transportation Company.

The NPA boss further disclosed that the proposed legislation will introduce a Cylinder Recirculation Investment Margin, which will require Parliament’s approval to impose an $80 charge on every metric tonne of LPG.

“We have to come to Parliament once again for Parliament to place about $80 per metric ton of LPG into that particular fund,” he said.

He explained that the levy is intended to finance Ghana’s Cylinder Recirculation Model, which aims to improve safety and efficiency in LPG distribution by shifting from individual cylinder ownership to a centralised exchange system.

According to him, the policy is designed to prevent consumers from bearing the full cost of infrastructure investments made by private bottling companies.

“The whole essence is to absorb the cost relative to the cylinder recirculation model because you do not want the big bottling companies, when they invest, the state must find a way of compensating,” he said.

Mr Tamakloe added that stakeholder consultations are ongoing ahead of the formal submission of the bill to Parliament, as the government seeks to modernise petroleum sector regulation and funding mechanisms.