The Chamber of Petroleum Consumers Ghana (COPEC) and the Consumer Protection Agency (CPA) have asked the National Petroleum Authority to withdraw with immediate effect, a cylinder investment margin (CIM) imposed on petroleum products effective April 2, 2020.

According to the two bodies, the new levy/tax is illegal as it does not have parliamentary approval.

A demand letter by the two bodies, issued through their lawyer, Martin Kpebu, reminds the NPA that the imposition is contrary to a constitutional provision and should be withdrawn immediately or they would proceed to court.

“As you are already aware, the CIM for all intents and purposes amounts to a tax, as such the NPA required the approval of Parliament in order to impose same. We humbly wish to draw your attention in this regard to article 174 (1) of the Constitution (1992) and the decision of Development Data & 2 Others v. National Petroleum Authority & Another (Suit No BC553/2009, 28th November, 2011).”

The demand to withdraw letter dated April 3, points out that while the two plaintive bodies support “Government’s quest to develop Ghana and as part of the efforts to develop Ghana to raise funds through various endeavours including the imposition of taxes and levies”, it should be “in a manner that is sensitive to the conditions of the Ghanaian citizenry.”

“However, my clients are equally mindful of the duty imposed on them by law to ensure that the Government, its agencies (including the NPA) and indeed individuals comply with the dictates of the law”, it said, asking that the cylinder investment margin be with immediate effect.

“TAKE NOTICE that should you fail to heed to our demand, I have my client’s instructions to bring an action against you in a court of competent jurisdiction to compel you to do so and for costs including solicitor’s fees, without further notice to you.”

—graphic.com.gh

OPEC will meet on Monday with Russia and other oil producers in the hope of agreeing supply cuts and ending a brutal price war.

The meeting, called by Saudi Arabia, will be held via video conference and will include oil producers from outside the OPEC+ alliance that includes Russia and a few other countries, two senior sources at the OPEC secretariat told CNN Business. The final list of invitees has not yet been set, they said.

The United States, United Kingdom, Canada and Mexico could be invited, according to reports.

The meeting comes after President Donald Trump suggested that massive production cuts could be on the way and Saudi Arabia called for an “urgent” effort to restore “balance” to the oil market.

US oil prices soared 25% — their biggest one-day gain on record — on Thursday after Trump tweeted that he hopes and expects Saudi Arabia and Russia will slash output by between 10 million and 15 million barrels per day.

Prices continued to advance Friday, recovering some of the massive plunge seen over the past month. Brent crude futures, the world’s benchmark, were trading more than 9% higher at $32.77 a barrel.

Saudi Arabia and Russia have been locked in an epic price war since early March when the OPEC+ alliance cracked, flooding the oil market with cheap crude just as demand craters because of the coronavirus pandemic. Crude had crashed to 18-year lows, crushing American oil companies and energy stocks.

Russia and Saudi Arabia started the feud when the coronavirus was thought to be a “brief health scare,” Stephen Innes, chief global markets strategist at AxiCorp said in a note. Now that it is morphing into one of the most severe hits to the economy since the Great Depression, “there’s going to be a change of heart,” he added.

While news of the meeting will support oil prices, likely averting a slide to single-digits and easing the huge pressure on storage facilities, “whatever cuts are agreed will not be sufficient to address the near/medium term oversupply,” Innes said.

Will American producers cut?

Analysts have expressed skepticism that Saudi Arabia and Russia would suddenly reverse course and slash production by nearly as much as Trump suggested, particularly as big cuts by Russia would undermine its goal of drowning high-cost US shale producers in a sea of cheap oil.

Even 10 million barrels, the low end of Trump’s touted production cuts, amounts to virtually all of Saudi Arabia’s output, according to Matt Smith, director of commodity research at ClipperData.

Saudi Arabia is OPEC’s biggest producer by far and has been doing much of the heavy lifting to curtail supply since the group began limiting production in 2017. Now it seems it wants others to help out.

A source within the OPEC+ alliance told CNN Business that it is unfair for two or three producers to shoulder most of the responsibility. “We need to see burden sharing,” the person said.

Previous cuts by OPEC and its allies have given US shale producers room to capture market share. The United States recently surpassed Russia and Saudi Arabia as the world’s largest oil producer.

But there are signs that American producers could now get on board with a global effort to rescue prices.

“While we normally compete, we agreed that #COVID19 requires unprecedented levels of int’l cooperation,” Ryan Sitton, a commissioner at the Railroad Commission of Texas, which regulates the state’s energy industry, tweeted Thursday.

President Trump is also expected to meet on Friday with the heads of some of the largest US oil companies, including Chevron (CVX) and Exxon Mobil (XOM), a person familiar with the matter confirmed to CNN Business. Russian President Vladimir Putin is set to meet with the heads of major Russian energy companies.

 

Source: cnn

 

The Chamber of Bulk Oil Distributors has donated boom mic poles to some media organisations to aid journalists’ safe coverage of the coronavirus outbreak. The CBOD presented the boom microphone poles to the Multimedia Group (JoynewsTV), Despite Media Group (UTv) and Omni Media (CitiTv) on Friday, April 3, 2020.

The poles, when connected to the boom mics will help journalists keep their distance while conducting field interviews, in keeping with the government’s directive for all to observe social distancing.

The Chief Executive Officer of the Chamber, Senyo Hosi, said journalists take a risk every day when they bring us the news in this period of the coronavirus outbreak and so the need for them to be protected.

“We really want to thank you on behalf of our membership for the service you are rendering to Mother Ghana. You are running a high-risk job. You leave your homes every day to make sure we get informed but every time you do that you put yourselves at risk for our country.”

“You are the ones who are still keeping the country sane and keeping us up to date but we need you to be safe. The safer you are, the better it will be for you to serve us as a people. So we found it prudent to make this donation to empower you to be able to observe the necessary social distancing required in this fight against COVID-19,” he said.

Mr. Hosi thanked all journalists for their selfless work and prayed for their safety.

“God bless you all and we wish that you all stay safe and no incident is ever recorded whatsoever here. We’ll keep you in our prayers.”

He said all Ghanaians are in this [crisis] together and must support one another to get through this crisis.

PRESS RELEASE
CBOD MAKES VIRTUAL DONATION OF GHS100,000 TO KCCR VIA VIDEO CONFERENCING TO SUPPORT CORONA VIRUS TESTING
April 1, 2020. 13.00 GMT

The Chamber of Bulk Oil Distributors (CBOD) has donated an amount of GHS100,000 to the Kumasi Center for Collaborative Research (KCCR) on Wednesday April 1, 2020 via video conferencing, in line with the government’s social distancing directive.

CBOD Chairman and CEO of Cirrus Oil Services Ltd. Ivy Apea Owusu made the virtual donation on behalf of the Board and Management of CBOD.

“The Kumasi Center for Collaborative Research (KCCR) has indeed been at the forefront of this fight since the first few Covid-19 cases broke out in Ghana. As the Health minister mentioned in the press briefing this morning, KCCR has already conducted approximately 335 tests covering the middle and northern parts of the country and that means there is a lot of pressure on the center’s resources.”

“We are therefore pleased to donate one hundred thousand Ghana cedis (GHS100,000) to KCCR towards the acquisition of sampling and testing items which we understand are of pressing need to the center at the moment.”

Director of KCCR Prof. Richard Phillips expressed gratitude to the CBOD on behalf of the Kwame Nkrumah University of Science and Technology (KNUST) and the KCCR. He said that more resources are needed with the rising number of Covid-19 cases.

“On behalf of the KCCR board Chairman Prof. J.S.K Ayim and the Vice Chancellor of Kwame Nkrumah University of Science and Technology Prof. Kwasi Obiri-Danso and the KCCR family, I wish to express my profound gratitude for this generous gift of GHS100,000 from the Ghana Chamber of Bulk Oil Distributors. This support will help KCCR improve and upscale testing of Covid-19 in Ghana. And as you know laboratory confirmation is key in the control strategy for Covid-19.”

Prof. Phillips said the donation would make it possible for KCCR to process 300 patients’ samples in 24 hours He added, he was excited the donation was done over the internet. Mrs. Apea Owusu shared similar sentiments, saying the virtual donation ensured strict observance of social distancing.

“At least one thing about the current crisis is that it has pushed us to innovate and here we are doing this donation virtually; the very first digital donation that I personally have ever witnessed or been part of. I believe it is also a prudent and creative way of maintaining social distancing protocols.”

Chairman Apea Owusu thanked the KNUST, the KCCR and all the medical practitioners, health officials and front-line staff in the fight against Covid19.

The CBOD’s Head of Finance and Industry Operations Richard Kissi assured that the donated amount would be immediately paid into the designated KCCR account.

Signed
Ivy Apea Owusu
Board Chairman

The Vice-Chairman of the LPG Marketers Association of Ghana, Gabriel Kumi, has described as unfortunate the introduction of the Cylinder Recirculation Recovery Margin introduced by the National Petroleum Authority on liquified petroleum gas.

LPG operators have been asked by the NPA to start charging 13.5 pesewas on each kilogram of LPG.

According to the Petroleum Authority, the introduction of the Cylinder Recirculation Recovery Margin is to support stakeholders in the supply chain ahead of the implementation of the Cylinder Recirculation Model.

But Gabriel Kumi, lamenting the decision on Eyewitness News, said the price of LPG should have seen a reduction rather since the price of crude oil on the international market is on a decline.

“We see the move to introduce new levies on the product as very unfortunate and more unfortunate is the timing is the introduction of this levy. We are under lockdown. We believe this is the time we need to consume more LPG to cook in homes. This is the time charcoal and wood fuel which is the alternative to LPG are not able to come into Accra and Kumasi so we expect that the LPG will be made more affordable for the ordinary consumer to use in their daily chores but unfortunately, a tax has been introduced,” he argued.

“Consumers were expecting a very sharp decline. We have very discerning consumers who are monitoring the events on the international crude oil market. And our consumers are very much aware that crude oil is on the decline for some time now and they are expecting that when they come to the pump, they are expecting a very significant decrease in the price of LPG but unfortunately the introduction of this levy is not going to make it possible,” he added.

Cylinder Recirculation Model

President Nana Addo Dankwa Akufo-Addo, shortly after the Atomic Junction Gas explosion in 2017, directed the implementation of the Cylinder Recirculation Model.

This meant that gas cylinders will no longer be filled up at gas retail outlets, but cylinders will be bought from distributors already filled when they go empty.

But over the years, LPG operators and marketers have heightened calls for the government not to implement the model.

Apart from concerns over the loss of jobs, the LPG Operators Association has constantly complained that proper stakeholder consultations were not carried out as they were not engaged on the policy.

It is for this reason that they threatened to sue the government if it failed to reach a consensus with all stakeholders on the model in 2018.

They had also embarked on a strike as part of protests against the government’s decision to implement the policy.

Calls to scrap high taxes on LPG

The LPG Marketers Association of Ghana has on several occasions lamented the high cost of LPG and the negative impacts consumers have had to bear over the past years.

According to them, the only way the government will be able to achieve its target of doubling the consumption of LPG by 2030 is to scrap taxes on the product – an appeal they want the government to consider without delay.

The Association is convinced that such action will encourage more people to patronize the product and bring respite to “the masses”.

The government, however, has rejected the calls for a downward review in the taxes on Liquefied Petroleum Gas.

The Finance Minister, Ken Ofori-Atta, last year, said calls for a reduction or complete scrapping of the LPG taxes if heeded to, has the tendency to destabilize the economy.

—citinewsroom

The newly introduced levy or Cylinder Recovery Margin by the National Petroleum Authority (NPA), is to support LPGMCs/OMCs ahead of the implementation of the Cylinder Recirculation Model (CRM), the National Petroleum Authority has said.

The NPA in March this year launched the pilot phase of the policy in Kade in the Eastern region and Obuasi in the Ashanti Region.

The policy is intended to change the current mode of gas distribution into a more secured and safe manner.

The policy is to ensure increase usage of LPG from the current 25% to 50% by 2030.

As part of the CRM policy, the LPGMCs and OMCs will be responsible for the branding, safety and maintenance of the cylinders.

Customers will no longer have to take an empty cylinder to be filled, they simply take their empty cylinder to an OMC/LPGMC and pick up a filled cylinder.

There will be different cylinder sizes from 3kg to 14.5kg to ensure that consumers pay for what they can afford.

Contrary to claims by some interest groups in the petroleum industry that the levy will burden the consumers, sources say the Cylinder Investment Margin of 13.5 pesewas is rather to support the marketers procure and maintain the cylinders.

A source at the NPA says the regulator is determined to support the LPGMCs and Oil Marketing Companies, and has consistently engaged and consulted them on all aspects of the implementation of the energy policy.

—Daily Guide

GOIL has reduced its petrol price by a margin of 10 percent.

The reduction comes as the two weeks partial lockdown of Kumasi, Accra, Tema, due to the outbreak of coronavirus enters its fourth day.

The reduction is taking effect at all its pumps with Diesel XP now selling at GHC4.32 and Super XP at GHC4.32, respectively.

Petrol consumers who are facing tough times economically due to the virus situation, stand to save some money for other essential expenses at this critical time.

The price of gas has also recorded a significant reduction.

The reduction is happening at a time when the National Petroleum Authority (NPA) has introduced a Ghp13.5 Cylinder investment Margin, to help the LPGMCs offset aspects of the cost involved in procuring and branding cylinders for the new energy policy (the Cylinder Recirculation Model) Our checks also indicate that the Fuel Marking Margin remains at Ghp3.

Duncan Amoah, Chief Executive Officer of the Chamber of Petroleum Consumers Ghana (COPEC Ghana), has hailed the 10 percent reduction.

Giving his reaction to the reduction in prices in an interview with DGN Online, Mr Amoah says the Chamber least expected a 10 percent reduction, saying “10 is just good enough.”

He said COPEC was looking at a five percent reduction.

He therefore urged other Oil Marketing Companies to follow suit.

He also encouraged GOIL and other players in the industry to sustain the reduction after the coronavirus pandemic so consumers can really benefit.

Meanwhile, he encouraged OMCs to ensure the protection of their consumers by providing them personal protective equipment to prevent them from contracting coronavirus.

—Daily Guide

The African Centre for Energy Policy, ACEP, is calling on government to prepare a supplementary budget that will help manage the effects of low oil prices on the market.

According to ACEP, the impact of revenue shortfalls from the oil and gas sector due to price volatility on the international market, has severe implications for the budget particularly physical infrastructure and debt servicing as in the 2020 budget, Ghana’s infrastructure development programme is heavily dependent on oil revenues.

Global crude oil price has plunged in recent times, threatening the cash flow of oil companies and revenue of governments.

Earlier this month, oil prices saw its lowest drop after a price war between Saudi Arabia and Russia, with Russia slashing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the coronavirus outbreak.

Brent Crude oil price has also declined dramatically from $66.25 to $26 per barrel between 2nd January 2020 and 21st March 2020. This fall in oil price has affected global economic growth and demand for oil, thus creating excess oil supply.

A statement signed by Executive Director of ACEP, Benjamin Boakye, urged government to create “A new budget that accounts for the extraordinary drop in oil prices is required for oil producing countries in Africa. This also recognizes that a mid-term budget will be too late for many countries to accommodate the full effect of oil price drop and the impacts of COVID-19 outbreak on the national budget.”

Among other demands, ACEP is also asking government to “ensure the transmission of the lower oil price to support industry and consumers of petroleum products.”

They explain that the impact of the COVID-19 outbreak could be harsh for emerging SMEs and industries that are struggling to compete in the global space, and increased unemployment as a result of layoffs on the back the pandemic is possible to occur, thus the need for the call.

“In a low oil price era, the temptation for many countries could be to increase taxes on downstream consumption to offset the revenue losses upstream. This will be injurious to many businesses in Africa, particularly in the face of inadequate incentives and stimuluses compared to the developed countries. A full transmission of the lower price of oil is therefore required for businesses and consumers in general to boost economic activity. This minimizes production and service delivery costs to reduce the burden on consumers,” the statement added.

ACEP further urged government to have stabilization funds with adequate buffer that is capable of smoothing significant shortfalls in the budget.

“Also, hedging portions of oil outputs will minimize the impacts of oil price volatility on national budgets.”

ACEP urges 40% projected revenue in Stabilization Fund
Earlier this year, ACEP proposed to government to secure at least a 40 percent projected revenue in the Stabilization Fund in order to avoid the impact of revenue shortfalls from the oil and gas sector.

Executive Director of ACEP, Benjamin Boakye, explained that oil prices are bound to suffer from some volatility, so it will be in government’s interest to secure a constant 40 percent projected revenue in the Stabilization Fund to mitigate the effects.

“Our recommendation has been that at least we should have about forty percent of the projected revenue in the stabilization account. That should be enough to offset any instability in the international market” he said.

Source: citibusinessnews

The Chamber of Petroleum Consumers COPEC is asking Oil Marketing Companies to communicate details of petroleum prices pricing with transparency so that consumers are in the know and do not harbor suspicions they are being shortchanged.

This follows a press briefing to educate some journalists on the petroleum price build-up and pricing of petroleum products organized by the Chamber of Bulk Oil Distributors (CBOD). CBOD CEO, Senyo Hosi using the estimates of the CBOD Fair Market Price, Average Actual Market Price and the National Petroleum Authority (NPA) Benchmark Price from August 2019 to March 2020 explained that the actual average market price was higher than both the CBOD Fair Market Price and the NPA Benchmark Price.

Mr. Hosi further explained that in February 2020, the situation changed when the OMCs started pricing way above the CBOD benchmark, they were trying to recover a part of their losses in the past six (6) months, but they were still below the NPA benchmark price. It was only sometime around 5th March 2020 that the OMCs went above the NPA benchmark to recoup losses.

“OMCs have been selling below market price, which will mean either they or the Bulk Oil Distribution Companies (BDCs) are giving away a good part of their margin and taking a hit. It is for this reason that you will be hearing things like they’re trying to recover a bit of their cost.”

He said that consumers’ complaints that fuel prices are higher than they should be is fair but not balanced because prior to the OMCs recovering their losses, consumers had been buying at way lower prices while the OMCs were absorbing when prices were higher.

The Executive Secretary of COPEC, Duncan Amoah who had previously said at the press briefing that the recent increment of fuel prices was inadequate and unfair to consumers later acknowledged that the data provided by the CBOD to explain the pricing of fuel prices cannot be contested.

He charged the OMCs to be transparent with pricing of petroleum products to avert consumer agitation and keep consumers informed.

“The expectation is that if it has to go up by 20 pesewas (20 Ghp) and you do 15[Ghp] you should let us know but if we do not get these communication and then you suppress prices only to come back to us another day to say you’ve made certain losses so we should now pay for it then there would always be a challenge.”

Mr. Amoah called on consumers to be circumspect and look out for OMCs offering value for money.

The Chamber of Bulk Distributors (CBOD) has met with the media to bring clarity to the petroleum products pricing amidst suggestions that consumers are being shortchanged following complaints the recent reduction in fuel prices are inadequate.

At a press briefing last Thursday, March, 19, 2020, CBOD CEO Senyo Hosi first noted Ghana uses the Import Parity Model, meaning the price is benchmarked to the world market prices. He also gave a breakdown of the price build up using the estimates of the CBOD Fair Market Price, Average Actual Market Price and the National Petroleum Authority (NPA) Benchmark Price from August 2019 to March 2020 explained that the actual average market price was higher than both the CBOD Fair Market Price and the NPA Benchmark Price. But, this situation subsequently changed.

“OMCs have been selling below market price, which will mean either they or the Bulk Oil Distribution Companies (BDCs) are giving away a good part of their margin and taking a hit.”

Mr. Hosi further explained that in February 2020 when the OMCs started pricing way above the CBOD benchmark, they were trying to recover a part of their losses in the past six (6) months, but they were still below the NPA benchmark price. It was only sometime around 5th March 2020 that the OMCs went above the NPA benchmark to recoup losses.

“It is for this reason that you will be hearing things like they’re trying to recover a bit of their cost.”
He stated that inasmuch as it is fair and right that consumers assert that fuel prices are higher than they should be, that is not balanced because prior to the OMCs recovering their losses, consumers had been buying at way lower prices while the OMCs were absorbing when prices were higher.

The journalists after the CBOD presentation said it had brought clarity and perspective to the petroleum pricing issue because of the expectation by many that once international oil prices drop, pump prices should automatically be affected in similar fashion.

“I think meeting the CBOD to explain to us the reason why at least even if there will be a reduction it would not as expected is a good one because they have made us understand that there has been some cost that they [OMCs] need to recover. – Ebenezar Sabutey, Joynews.

“Well, for some period the OMCs and the BDCs themselves have taken a hit when prices were going up and they kept prices at a level that affected their margins and now that prices are going down it is very important to manage expectations in terms of consumers expecting prices to go down to a certain level so that the OMCs can use this period to make some recovery. I think the presentation was clear. They graphs and everything, they were okay. I understood them; the figures and then the interpretation that was given to the graph, I think it was excellent.”- Lawrence Segbefia, CitiTV/radio.

The Executive Secretary of COPEC, Duncan Amoah who had hitherto said at the press briefing that the recent increment of fuel prices was inadequate and unfair to consumers later acknowledged that the data provided by the CBOD’s presentation to explain the pricing of fuel prices cannot be contested.
He called for transparency on the part of the OMCs with regard to pricing of petroleum products to avert consumer agitation.

“The expectation is that if it has to go up by 20 pesewas (20 Ghp) and you do 15[Ghp] you should let us know but if we do not get these communication and then you suppress prices only to come back to us another day to say you’ve made certain losses so we should now pay for it then there would always be a challenge.”

Mr. Amoah also called on consumers to be circumspect and look out for OMCs offering value for money.