Ghana: Cylinder Recirculation Model Bylydia Darlington Fordjour

11 November 2019

Following a gas explosion at the Mansco Refilling plant at Atomic, Accra, on October, 7, 2017, which claimed seven lives and injured 132 others, parliament directed a number of action plans to implement an LPG policy on October, 12, 2017. The Ministry of Energysubsequently directed theNational Petroleum Authority, NPA to constitute an implementation committee to plan and execute aCylinder Recirculation Model, CRM which was part of the number of the proposed actions by cabinet.

Outline

The CRM policy is aimed at addressing concerns about public safety, product quality, accessibility, availability and affordability. It sought to get 50 per cent of Ghanaians to use LPG by 2030, from a current figure of 25 per cent. The constituted National LPG Policy Implementation Committee including non LPG service providers, hitherto, adopted a roadmap to assist in the implementation process on four thematic areas, listed as; Regulatory Framework, Cylinder Recall, Decommissioning of high risk refilling plants and training, as well as, capacity building.

When he met chiefs and people of the Upper West Region at Wa on 23rd October, 2019 the Chief Executive Officer for the NPA, Mr Hassan Tampuori,indicated that piloting of the CRMwould be done in the Eastern and Ashanti Regions of Ghana before extended to other areas.

The CEO stated also that the over 654 gas filling stations across the country would not be directly affected as they would be absorbed into the distribution chain of the CRM.

Specific responsibilities

The NPA will develop a market driven structure to ensure safety and increased access to LPG; enhance the capacity of existing regulatory institutions in order to meet the regulatory requirements of the new market structure; ensure the existence of robust and standard health, safety and environmental practices in production, marketing and consumption of LPG and conduct risk assessment of the gas filling stations, to categorise them into low, medium and high risk gas filling station stations so that the high risk ones are converted into distribution points and the others converted to bottling plants

Implementation of the CRM

At the forum, the Technical Aide to the CEO, Ms Sheila Abiemo took participants trough the CRM model and bits on what to expect. She indicated that;

With the old model, Ghana imports gas from other countries because the two processing plants are unable to produce enough to meet the demand of Ghanaians. About 73 per cent of gas is imported. The existing model postulates that whether imported or locally produced, the gas is kept at a storage.A gas truckpicks the LPG from the storage to the filling points for consumers to get access to them.

Adapted from Ghana's (simplified) LPG ecosystem

With the new model, Gas will still be produced or imported, kept at a storage and transported to designated bottling plants with trucks. At this point, cylinders will be filled and taken to the various distribution/exchange points for consumers to purchase the product with an empty cylinder and pay for the gas.

Under the CRM;

Cylinders would be owned and branded by the LPG marketing companies.

Filling of cylinders will no longer be done at the micro filling stations; Cylinders would be taken to the bottling plant which would be located at an industrial area and filled under safety conditions, after safety inspection.

Three new players will be added to the value chain; thus the bottling plants, cylinder transporters and cylinder retailers.4500 new jobs would be added to the value chain

The cylinders will come in different colours and sizes under different companieswith unique branding. A company can choose to operate a smart metre system where a customer will be provided witha billed cylinder in their kitchen, with metres on them. The customer would make payment for the quantity of LPG they need at the moment through mobile money and it would be supplied to them.

Licensing format will change such that, NPA will have to liaise with the Environmental Protection Agency, EPA and other stakeholders to ensure that safety in all respect is adhered to.In this instance if the location of a potential filling plant is such that in cases of accidents, the impact would be severe, it would be converted into a distribution point.

Vehicles that use LPG will access theirs at the refilling plants, after a safety check has been conducted on their tanks. Trucks will still transport LPG to commercial consumers.

The Cylinder Recall exercise

Preceding the CRM will be a cylinder recall exercise where the NPA would make announcement for consumers of LPG to present their old cylinders in exchange for new ones from the LPG MCs at the distribution points. Those without cylinders can also access new cylinders, pay for the gas and add a deposit for the cylinder. The deposit would serve as insurance for the company, in case the consumer returns a dented cylinder.

Merits of the CRM

The CRM is said to have marketing, health, safety and accessibility benefits. It will ensure that a lot more people use LPG and reduce over reliance on trees for firewood and charcoal. This will go a long way to reduce the spate of deforestation.

Problems with vehiclestaking the LPG round to the various micro filling stations without full adherence to the standards of operations will also be minimized.

The cylinders will have clear responsibilities for safe keeping as the duty will be vested in the LPG MCs.

The CRM will also promote local content as the opportunities would be available for only Ghanaians.

CRM will reduce respiratory diseases in especially women as it would reduce the over-reliance on charcoal and firewood.

Parliamentary approval

At the forum at Wa, a member of the parliamentary select committee on mines and energy, Mr George MirekuDuker indicated that; "I am here representing both the minority and majority in parliament and they have agreed to the CRM. Parliament supports the CRM and it will continue unabated irrespective of the government in power.

Fallouts of the CRM

The Vice President of LPG Marketers, Mr Gabriel Kumi who was also present, lauded the CRM but highlighted the need to secure the jobs of the close to 700 gas filling stations through whose efforts the LPG industry in Ghana has thrived as well as the drastic reduction of LPG price by government.

The Upper West Story

According to Mr Kumi, only 1 per cent of the population in the Upper West Region use LPG.

CRM is good in this context if it will be adequate to eradicate the 'no gas' syndrome even when people have money to buy the product but the filling stations do not have them. It will also mean reducing cost of accessing LPG because cylinders which are quite expensive would be provided.

CRM will increase consumption because it will eradicate the fear of some potential users as it sorts out the issue of safety.

However, the major hindrance here is the issue of the cost of LPG

How many people in the region would be able to part away with close toGH₵100 for gas in a 15kilogramme cylinder as is currently the case?

Even the few who patronize LPG use charcoal when they want to prepare dishes that in their opinion would take time to boil. LPG is not a luxury product; it is a necessity and the pricing should urgently be looked at if the CRM would achieve its 50 per cent consumption target.

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