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Energy Policy: Redirect dollar auction policy to importers

LPG prices Policy: Redirect dollar auction policy to importers

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Energy Policy Analyst, Benjamin Nsiah, has called on the government to re-direct its dollar auction policy towards the importation and pricing of Liquefied Petroleum Gas (LPG) in Ghana.

The move comes in response to the rising price of LPG, which has gone up by about ¢8 per kilogram in January 2023 to ¢15 per kilogramme in the 2nd pricing window of February 2023, discouraging households and small businesses from using the clean cooking fuel.

The high and unchecked surging of LPG prices is likely to reduce its consumption in 2023, negatively affecting the government's policy target of achieving 50% LPG penetration of households by 2030.

Furthermore, households will be compelled to use unclean cooking fuels like firewood and charcoal due to non-affordability of LPG, contributing to the depleting country’s forest cover, whilst causing respiratory diseases and contributing to climate change.

The government’s previous interventions, including the Bank of Ghana forex auction to the Bulk Distributing Companies (BDCs) and the ‘Gold for Oil’ policy through the Bulk Oil Storage and Transportation (BOST), have successfully stabilized or reduced the prices of petrol and diesel in the first two months of 2023. However, LPG prices continue to go up, now selling at ¢15 per kilogramme in the 2nd window of February 2023.

Therefore, the Energy Analyst suggests that the government should re-direct its dollar auction policy towards LPG imports and pricing, as BDCs would hardly need dollar auction to import diesel and petrol due to the ‘Gold for Oil’ policy, which is operating at a higher speed currently.

This, he believes would better impact on LPG pricing, compared to the scrapping of the taxes and levies of about ¢1.21 per kilogram, which make up approximately 9% of the LPG price build-up in February 2023.

“It has become necessary to internalise the pricing of LPG and make it affordable, given the trend of international LPG prices, which has been on an upward trajectory since December 2022, rendering the impact of scrapping taxes insignificant in subsequent windows”, he added.

The analyst’s suggestion is in line with the government’s objective of achieving affordable and accessible clean energy for all and ensuring a sustainable environment.

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