Ghana’s National Petroleum Authority (NPA), the regulator for the downstream petroleum sector, has proposed the creation of three regulatory funds as part of a new draft Bill currently awaiting consideration and approval by Parliament.
The proposed funds are the Distribution Fund, Infrastructure Fund and LPG Promotion Fund, which are intended to support petroleum product distribution, infrastructure development and the promotion of LPG and other alternative fuels.
The provisions relating to the Distribution Fund are contained in Clauses 25 to 40, while Clauses 42 to 58 deal with the Infrastructure Fund. The proposed LPG Promotion Fund is covered under Clauses 59 to 75 of the draft legislation.
Distribution Fund
The Distribution Fund is proposed to support the reliable and efficient movement of petroleum products from refineries and bulk supply points to storage depots, retail outlets and other delivery locations across Ghana.
The fund would also be responsible for supporting uniform petroleum product pricing nationwide, ensuring consistent supplies to different parts of the country, strengthening security within the petroleum distribution system and improving the efficiency of product distribution.
The NPA has proposed several funding sources for the fund, including the primary distribution margin contained in the prescribed petroleum pricing formula, the unified petroleum price margin and the security margin intended to finance security for the petroleum products distribution system.
The fund would be administered by a Distribution Fund Management Committee, with the sector minister nominating a member of the NPA board to serve as chairperson.
Membership would also include the NPA Chief Executive Officer, representatives of BOST Energies, the Tanker Owners Union and the Chamber of Bulk Oil Distribution Companies (CBOD), as well as two additional persons with managerial experience in the petroleum sector nominated by the minister.
Infrastructure Fund
The proposed Infrastructure Fund would provide financing for the construction, development and maintenance of a sustainable petroleum products distribution network.
It would also finance infrastructure associated with the storage, refining and transportation of petroleum products, while supporting the establishment and maintenance of strategic fuel reserves.
According to the Bill, the fund would receive money from an infrastructure margin incorporated into the prescribed petroleum pricing formula, a levy Parliament may impose on petroleum products, fees paid by petroleum service providers for using infrastructure financed through the fund and other monies approved by Parliament.
An Infrastructure Management Committee would oversee the fund.
The committee would be chaired by a person with expertise in the downstream petroleum industry nominated by the sector minister. Other members would include a representative of the Ministry of Energy and Green Transition at a rank not below director, two NPA representatives, and representatives from BOST Energies, Bulk Import, Distribution and Export Companies (BIDECs) and the Tema Oil Refinery.
LPG Promotion Fund
The third proposed fund, the LPG Promotion Fund, would focus on expanding the use of liquefied petroleum gas (LPG) in Ghana, including its application in the transport sector.
Its mandate would extend to the promotion of liquefied natural gas, compressed natural gas, biofuel blends, hydrogen and other non fossil fuels, with electricity excluded from the definition.
The fund would also support the rollout of the cylinder recirculation model and investment programmes linked to the energy transition strategy within Ghana’s downstream petroleum industry.
The proposed funding sources include an LPG promotion margin incorporated into the prescribed LPG pricing formula, a green transition margin, an amount determined by the NPA and charged as part of the supplier’s premium, a levy Parliament may impose on a petroleum product and other funds approved by Parliament.
The fund would be managed by an LPG Promotion Fund Management Committee, chaired by the NPA Chief Executive Officer.
Its membership would include the NPA director responsible for finance, nominated by the Chief Executive Officer; representatives of BIDECs and LPG marketing companies; a representative of LPG bottling companies nominated by the NPA board; a representative of the relevant ministry; and an environmental civil society representative nominated by the NPA board.