New CRM levy on LPG withdrawn – Energy Minister
Energy Minister, Peter Amewu
The Cylinder Recirculation Recovery Margin (CRM) which was introduced by the National Petroleum Authority (NPA) and was expected to allow LPG operators to charge 13.5 pesewas for each kilogram of LPG has been withdrawn.
This was revealed by the Energy Minister on Thursday, April 16, 2020 at a press briefing.
“That slight increase in price that you saw in the papers, it has been withdrawn. The recirculation module, I think as you are all aware was a very noble thing introduced by the government. That amount you saw was supposed to level up the prices. It has been withdrawn,” he said.
According to the minister, the government will subsequently arrive on a decision in relation to the new levy introduced after the cabinet has carefully reviewed it.
It can be recalled that the NPA introduced a new Cylinder Recovery Margin (CRM) on Liquefied Petroleum Gas (LPG) which took effect on April 1, 2020. This new CRM was to add extra GHp13.5 per kilogram of LPG. The new move by the NPA raised criticisms from several industry players claiming that the new levy was illegal and not approved by the parliament.
The NPA further instructed Oil Marketing Companies (OMCs) to increase the levy on Fuel Marking Margin from 3 pesewas to 4.5 pesewas per litre on every product.
However, the NPA boss Hassan Tampuli in a statement argued that the new levy introduced was to allow consumers to enjoy a reduction of 11.56 percent and that claims of LPG Marketing Companies Association of Ghana (LPGMCs) are not factual.
“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.”
“The margin is, therefore, to assist the marketers to 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”, the statement added.
This led to the Chamber of Petroleum Consumers (COPEC) and the Consumer Protection Agency (CPA) to sue the NPA for the introduction of the Cylinder Recirculation Recovery Margin (CRRM).
The plaintiffs in their writ of summons argued that the NPA failed to consult with various stakeholders before introducing the policy.
“Plaintiffs state that the failure of the 1st defendant to consult with the service providers before the introduction of the new petroleum pricing formula has led to agitations among such service providers, particularly, the LPG Marketing Companies Association of Ghana (LPGMCs) who have issued a statement calling on the 1st defendant to withdraw the CRM.”