By Festus William AMOYAW
In 1990, the Government introduced Liquified Petroleum Gas (LPG) into the Ghanaian market. The LPG was part of the output of Tema Oil Refinery (TOR) and an opportunity to improve access to clean cooking fuel. The initial phase was in Accra and the business model was a door-to-door refilling of cylinders. The government gave out the cylinders for free and had Bulk Road Vehicles (BRVs) moving from house to house to dispense the products into the cylinders.
The government realized there was a lot of risk associated with the business model as the BRVs were getting into congested neighborhoods with safety concerns raised by the customers. Again, the product was then heavily subsidized as part of the strategic for customers or users to adopt the product and increase access.
From an annual consumption of about 5,000MT in the 90s, the annual consumption has reached 312,000MT as at end of 2023. In the sub-Saharan region, the consumption per capital of LPG in some countries are Ghana- 6.0kg; Nigeria 4.5kg; Senegal 10.4kg; Cote D’ivoire-17.0kg and Cape Verde – 23.6kg.
For all the benefits that LPG can bring, many households are reluctant to make the switch because of concerns about the safety of handling and using the fuel. Like all other forms of energy, LPG is potentially hazardous if mishandled or misused. Accidents associated with LPG can and do occur, though several studies have demonstrated that LPG is safer in practice than most other cooking solutions, particularly kerosene. Aside from the human suffering and financial cost involved, LPG-related accidents undermine consumer confidence in the fuel. The dramatic nature of some LPG accidents has led to sensationalist reporting, which has stoked public fears about LPG.
The government’s aim was to increase LPG penetration to 30percent by 2020 as per its strategic national energy plan (2006–2020). However, this target fails to meet the ‘Sustainable Energy for All’ Action Agenda 2015, which aimed to have 50percent of households use LPG as their primary cooking fuel by 2020.
Again, Ghana has set an ambitious target in 2020 of achieving 50percent penetration of LPG by 2030. The past targets have been missed for various reasons. There has been limited progress in the clean-cooking energy transition is not unique to Ghana. The target has suffered many challenges due to the rising world prices, removing of subsidies due to proliferation of taxi drivers converting their vehicles to LPG, safety concerns and the lack of expansion of the refill stations across the country.
In India, around 75percent of the population are now using LPG and per capita consumption has risen to around 16 kg per person per year, thanks in part to recent large subsidized programmes. In some developing countries with higher average household incomes, such as Brazil and Morocco, LPG penetration is close to 100percent.
According to researchers despite several multi-institution, multi-country efforts over the last two decades, progress in the clean-cooking energy transition in developing economies has been modest. Whereas the local availability of LPG and initial uptake have improved, low-income households that adopt LPG tend to use it sporadically as a non-primary cooking technology, at best, or abandon it after a brief period of use. Notably, qualitative studies have also reported that the primary cook (mostly women) is often familiar with LPG and have reported time gains and comfort from LPG use over traditional cooking.
The government’s initially policy in the 90s was abandoned due to the economic challenges. That provided an opportunity for the private sector to intervened and sustain the momentum. Till date the LPG marketing and distribution sub-sector of the value chain is one of the only sectors totally controlled by Ghanaians (no foreign entity operates at that level). The new strategy was developing of refill stations across the country. Most of the refill stations that were built by indigenous Ghanaians were cited in Accra, Kumasi, Takoradi, and a few others in the other regions and cities.
Presently there are about 768 refill stations serving the entire population of 32million. In total these stations have installed about 1,000 storage tanks ranging from 5metric tonnes to 50 metric tonnes. There are about 44 LPG marketing companies (LPGMCs) down from about 144 a few years ago. During the transition from the neighborhood services to the refill stations, the government had transferred the BRVs to the private sector to help in the lifting of products from TOR to these stations.
In the last 34 years, the industry has evolved with some added layers in the value chain with the inability of TOR alone to meet the demand of LPG in Ghana. There are private entities described as Bulk Oil Distribution and Export Companies (BIDECs), responsible for the importation of LPG into Ghana. Ghana National Gas Company is also playing an important role and meeting about 30percent of the LPG demand in Ghana.
In 2017 after a series of explosions at various refill stations and coupled with citizens agitation in the establishment of LPG refill stations in neighborhoods there was a need to rethink the use of retail stations as means to increasing access to clean cook fuel.
The National Petroleum Authority (NPA), the regulator of the downstream oil and gas industry rose to the occasion leading to the ban on establishing of new refill stations (affecting the goal of 50percent access to LPG by the population). In place of that the regulator muted that idea of introducing the LPG Cylinder Recirculation Model (CRM) policy which exists in other countries such as Cote D’ivoire, Morroco, Senegal and Cape Verde.
The CRM simply means, users of LPG will not have to own cylinders as pertains in the market today. Two LPG cylinder distribution models exist worldwide: the branded cylinder recirculation model (BCRM) and the customer-controlled cylinder model (CCCM). Ghana currently practices CCCM and the plan is to move to BCRM. Under the BCRM as the per the policy of the NPA, current users of LPG will be required to swap their existing cylinders for new ones from LPG Bottling Plants (they are the entity branding and owning the cylinders).
In other jurisdictions the LPG Marketing companies owned the cylinders and go to the Bottling Plants for refilling under a hospitality agreement. Subsequently, customers will pay for the content by swapping an empty cylinder for a filled one. Customer accepting to swap their cylinder means they are not entitled to the same cylinder again. There will be an agreement between the marketer and the customer to that effect.
The BCRM policy is expected to improve access as cages (exchange centers) can be located closer to neighborhoods or residential areas. Even small retail shops can serve as exchange centers. The risk of domestic cylinders exploding and causing a lot of damage is lower compared to an explosion from a bulk that is used at refill stations. The BCRM has some advantage beside the accessibility. Creating of jobs is an example, Morocco has about 650 distributors and over 100,000 retail outlets and same can be replicated in Ghana for years to come.
The NPA in September 2023, rollout the CRM in Ghana with Four Bottling Plants in Tema and Kumasi. The CRM will be piloted in Greater Accra and Ashanti Regions in the first phase. The roll out has faced its own challenges especially from the LPG Marketers Association a body that has played a significantly role in the development of the sector. The Association is not against CRM but do have some concerns especially in the areas of compensation for loss of business. The implementer of the policy has decided that cages will be mounted at existing retail stations. There will be a parallel system in place for about 5 – 7 years depending on which stakeholder you will engage.
The NPA policy on CRM is expected to improve the access to LPG and has received support from some Civil Society Organisations such as Imani Africa. In all of these, the quest to replace the existing value chain with a new one per the policy and ignoring issues related to the hazards is one that is lost on everyone including the Environmental Protection Agency (EPA). The environmental hazards of dislodging the retail stations out of business is related to the decommissioning and disposal of the contaminated equipment at the retail stations.
By law, to establish an LPG Refill station among the myriads of permits required (over 14 permits and licenses) from Departments and Agencies. Before the NPA issues a refill station a license is an Environmental Protection Agency (EPA) permit. A refill station beside the buildings will typically have a tank (loosely described as Bullet) it can be underground or above the surface.
Most of the LPG refill stations in Ghana have above ground tanks with varied sizes. There are dispensers, pumps, pipelines to transport the product from the tank into the dispensers. The two most common types of Liquified Petroleum Gas (LPG) found in commercial environments are propane and butane. LPG is colorless, odorless and heavier than air, therefore if a cylinder is defective and leaking, it could cause a volatile explosive atmosphere and life safety hazards without us being aware.
Butane is an explosion hazard and causes a dangerous fire when vapors are ignited from heat, spark, open flame or other source of ignition. Butane is heavier than air and may travel long distances to a point of ignition and flash back. Container may explode in heat or fire. Butane releases flammable gas at well below ambient temperatures and readily forms a flammable mixture with air.
The current legal regime requires a business to acquire an EPA Permit, however, the law does not make any provision for the decommissioning of the equipment. At the moment, Ghana does not have any dedicated waste management site for the proper disposal of LPG storage tanks, cylinders and other equipment used at the refill stations. It is assumed that the LPG is clean but the residue can cause extensive damage if not properly managed especially with stations located in residential and populated areas.
The decommission stage involve the removal of the bulk tank, pipelines (with some buried underground), dispensers and maybe cylinders kept in the station. The decommissioning of an LPG Station comes at a cost for which at the moment is not factored in any policy by the various Ministries, Department and Agencies connected to the sub-sector. Whose responsibility is to ensure there is a proper decommissioning and disposal of the hazards from these refill stations when CRM is fully implemented.
Aside the process, the cost can be a problem for an already battered sector and entrepreneurs with limited sight of the future. The main problem lies in the introduction of the CRM. As bottling plants push new cylinders into the system and the adoption by customers increases, most refill plants will become redundant and out of business.
The NPA envisage some LPG refill plants (low risk category) to remain in serving the auto market. But most will have to be decommissioned either by choice or regulations. The reality is that the NPA and EPA at this crucial moment should know of the challenges that lies ahead in the next five to ten years. The decision to take on the risks and costs of decommissioning these LPG refill stations must commence now as part of the introduction of CRM.
When a storage tank system has been permanently removed from service, the storage tank system shall follow these steps as part of the decommissioning.
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petroleum and allied petroleum products are removed and vapours purged from the storage tank, piping, dispensing, and transfer equipment; and
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the storage tank, piping, dispensing, and transfer equipment are removed.
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If the site is contaminated with petroleum or allied petroleum products, the site shall be remediated.
