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Legal suit looms over fresh increase in taxes on LPG

The National Petroleum Authority faces legal action over its decision to increase taxes on LPG.

Advocacy groups, the Chamber of Petroleum Consumers and the Consumer Protection Agency have demanded, the NPA “ceases immediately with the unlawful collection”

The two groups have argued the cylinder investment margin did not have parliamentary approval as required by Article 174(1) of the 1992 constitution.

That part of the law states; “No taxation shall be imposed otherwise than or under the authority of an Act of Parliament.”

The NPA’s Cylinder Recovery Levy is GHp 13.5 and took effect on April Fool’s Day (April 1)

LPG marketing companies have kicked against the levy, arguing that it would lead to a transfer to the consumer, any increase in price at the pump.

The NPA has explained, the cost of LPG is expected to drop hence the levy’s introduction would not to see any increase in the cost of LPG.

Hassan Tampuli is NPA Chief Executive Officer

“Per our projection for this very pricing window ( April 1 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. These projections were made before the decision to introduce the Cylinder Recovery Margin.”

But the legal counsel of the two groups, Martin Kpebu, warned a legal suit to settle the matter remains an option they intend to pursue if the NPA persists with the levy.

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Read NPA the full statement

PRESS RELEASE

 3rd April, 2020

RE: WITHDRAWAL OF CYLINDER RECOVERY MARGIN FROM LPG PRICE BUILD UP

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.

Per our projection 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. These projections were made before the decision to introduce the Cylinder Recovery Margin.

It is important to state that under the Cylinder Recirculation Model (CRM), LPG cylinders will be procured, owned, branded and maintained by the Oil Marketing Companies (OMCs) and LPG Marketing Companies (LPGMCs).

The LPGMCs and OMCs will assume full responsibility of the safety and maintenance of the cylinders, and also be liable for any accident involving their branded cylinders. The margin is therefore to assist the marketers 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. That notwithstanding, the NPA will continue to engage them on this and other related issues of mutual concern.

We take note of the concerns raised in the statement regarding tax components in LPG and, we are happy to communicate a positive outcome in the fullness of time.

It is the SOLE PRIORITY of the NPA that the public interest is served. It is also a responsibility of the NPA that the SAFETY and SECURITY of the general public is not COMPROMISED.

We believe strongly that it is in the INTEREST of the general public, Petroleum Service Providers, motorists and consumers of petroleum products that, we develop a model that will SECURE the SAFETY of the general public, in order to forestall the past occurrences of gas explosions we have witnessed as a nation.

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.

SIGNED
CORPORATE AFFAIRS.

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