We introduced margins on LPG not a tax – NPA

The National Petroleum Authority (NPA) has clarified that it recently introduced a bottling plant and cylinder investment margins on Liquified Petroleum Gas (LPG) and not a tax.

The LPG Marketers Association expressed concerns over the government’s strategy to boost LPG consumption, citing that continuous tax introductions would hinder this goal.

Their statement was in response to the NPA’s recent margin on LPG as part of the revised pricing structure, effective April 1, 2024.

The Association strongly criticised this move, particularly condemning the addition of $80 per metric ton (MT) as part of the suppliers’ premiums, specifically designated for Bottling Plant and Cylinder Investment Margins.

They argued that this imposition was unjustifiable and indicated the Authority’s disregard for the decline in consumption since 2021.

Gabriel Kumi, the Vice President of the Association, emphasised that the government cannot expect to both increase LPG consumption and introduce more taxes, likening it to wanting to “have its cake and eating it too.”

He said that would deter people from consuming the product.

However, the Head of Economic Regulation at the NPA, Abass Ibrahim Tasunti, told Umaru Sanda Amadu in a Point-Blank interview on Eyewitness News on Citi FM that “LPG is not being taxed. It is not a tax; it is a margin, specifically the bottling plant margin and cylinder investment margin.”

Tasunti further explained that in the price build-up for LPG, there were various components, including taxes, levies, and margins.

He said the margins play specific roles in the price build-up and that the marketers’ margin goes to the LPG marketing companies that distribute the product.

As for the Bottling Plant and Cylinder Investment Margins, he said they accounted for about 6% of the price of LPG.

Tasunti also justified the new margin, stating that it was necessary under the value chain.

In the price build-up today, LPG marketing companies have a margin to pay for the cost of constructing their stations and operating them. So, the bottling plants also need a margin because we have invested in the facility…The bottling plant margin because now under the new value chain, the bottling plants have been constructed, currently we have four of them one is in Kumasi three are in Tema.”

“So, once they start selling, the price of LPG that they will sell will have a bottling price margin in there…So the total is 44% of that $80 per metric ton is the bottling price margin…The margin is necessary because it is justified under the value chain we have,” he stated.

Source: Businessweekghana