The recent surge in Liquefied Petroleum Gas (LPG) prices has significantly impacted Ghana’s transport sector, threatening the nation’s progress towards clean energy usage. LPG, considered the cleanest and safest energy source for transportation, reduces Carbon Dioxide (CO2) emissions by approximately 15% compared to diesel and gasoline. Despite its environmental benefits, the affordability of LPG is now in question.
Globally, the use of LPG in vehicles has been on the rise. In 2015, approximately 23 million vehicles, representing 4% of the global transport sector, used LPG. By 2019, this number had increased by 17%. The global market for CNG and LPG vehicles is projected to grow at a compound annual growth rate (CAGR) of 7.5% from 2022 to 2030. The transport sector’s consumption of LPG grew by about 15% in 2022, with countries like Russia, Poland, Korea, and Turkey leading the way.
In Ghana, over 32,000 vehicles were licensed to use LPG by the Driver, Vehicle, and Licensing Authority (DVLA) as of 2022. The rise in LPG usage, particularly among commercial vehicles in peri-urban areas, is attributed to its affordability and environmental benefits. It is estimated that an LPG-powered vehicle consumes at least 15 kilograms of LPG per day, amounting to approximately 14,400,000 kilograms per month, which constitutes about 50% of national LPG consumption. With the country yet to establish fast charging points for electric vehicles, LPG usage significantly contributes to reducing CO2 emissions.
However, the recent introduction of a US$80/MT fee on the Price Build-Up (PBU) of LPG by the Ministry of Energy and the National Petroleum Authority (NPA) has made LPG the most expensive petroleum product in Ghana. As of the second window of June 2024, the average price of LPG was Ghc16/kg, compared to Ghc14.25/L for diesel and Ghc14/L for petrol. This price increase is pushing many LPG vehicle users back to using more polluting fossil fuels, undermining Ghana’s efforts to achieve its Nationally Determined Contributions (NDCs).
The US$80/MT fee is generating approximately US$1.15 million per month, or US$13.8 million annually, from LPG vehicle users who do not benefit from the Cylinder Recirculation Model (CRM) instituted by the NPA. There is no justification for charging LPG vehicle users for cylinder investment and bottling plants when they do not participate in the CRM. This practice is seen as unfair to those supporting the government’s clean energy targets.
In light of these developments, CEMSE are urging the Ministry of Energy and NPA to suspend the US$80/MT fee at LPG filling stations. This move is essential to make LPG affordable for vehicle users, promoting its usage and contributing to achieving Sustainable Development Goal 7 in the transport sector.
Additionally, CEMSE recommends that the US$80/MT fee be directed towards cylinder exchange points where investment in bottling is needed to implement the CRM. However, this could potentially increase household LPG prices, affecting overall consumption.
The call for policy revision aims to balance economic and environmental goals, ensuring that Ghana continues to progress towards a cleaner and more sustainable transport sector.
Attached is a statement:LPG PRICE SURGE STALLS GHANA’S CLEAN ENERGY USAGE IN TRANSPORT SECTOR -CEMSE
