The National Petroleum Authority (NPA) has successfully initiated an Open Competitive Tender for Liquified Petroleum Gas (LPG) imports, signaling a strategic move to enhance efficiency and significantly reduce costs in the country’s LPG sector.
In the maiden tender held on January 29, 2024, the winning bidder presented the lowest premium of USD30.39 per metric tonne (MT) for the four Lots tendered, covering the period from March to June 2024.
This is a remarkable decrease from the existing premiums ranging between USD67/MT to USD98/MT. Each Lot comprises approximately 20,000 metric tonnes.
The NPA emphasizes that the shift towards open competitive tenders for LPG importation is a deliberate effort to curtail costs and streamline operations for increased efficiency. The decision was made after thorough consultations with Bulk Import, Distribution, and Export Companies (BIDECs), receiving substantial support from the majority of stakeholders.
The Authority clarifies that the monthly quantity tendered represents around 70 percent of Ghana’s LPG consumption, with the Ghana National Gas Company (GNGC) contributing the remainder.
The move aligns with the NPA’s 2021 proposal for Open Competitive Tenders, aiming to foster competition, bring efficiency, and ultimately reduce LPG costs.
This measure is particularly crucial for the successful implementation of the Cylinder Recirculation Model (CRM), where affordability is a key factor. The proposal underwent a rigorous in-house assessment to gauge feasibility, and upon determining its potential to reduce importation costs, the NPA secured approval for engagement with BIDECs.
Throughout 2023, the NPA engaged in multiple discussions with BIDECs, resulting in the majority supporting the proposal, despite reservations from a few.
The Authority considered these concerns but found them insufficient to impede the policy’s implementation.
Data available to the NPA highlights a significant disparity in premiums paid by BIDECs to International Oil Trading Companies (IOTCs) over the years, attributed to the smaller parcels of LPG imported.
By opting for bulk imports through the tender process, the NPA anticipates leveraging economies of scale, reducing premiums, and further enhancing the efficiency of LPG importation.
This strategic move by the NPA is anticipated to positively impact the local LPG market, offering potential relief to consumers and bolstering the sector’s overall competitiveness. Stakeholders will be closely monitoring the outcomes of this initiative as it unfolds in the coming months.
