Deregulated prices could hamper LPG promotion

The Ministry of Energy and Petroleum intends to distribute for free 50,000 cylinders and cook stoves to the country’s ten districts. The distribution forms part of the Rural Liquified Petroleum Gas (LPG) Promotion programme that is targetting rural areas with low access to LPG.

The programme, which started last year, has so far distributed 1,500 pieces of cylinders and cook stoves to selected districts as a pilot project.

To facilitate the programme and ensure that beneficiary districts have constant supply of LPG to prevent users from reverting to wood-fuel, the Ministry will facilitate the setting up of 10 mini-refill plant outlets in some districts.

Currently, firewood and charcoal account for most household energy used in the country, and this raises fears that the country may not achieve the Millennium Development Goal 7 and the ECOWAS’ white paper for energy access by 2015.

The key policy objective of the Ministry of Energy and Petroleum is to increase LPG access to households and public institutions from 9.5 percent in 2008 to at least 50 percent by 2020.

However, the challenges facing the LPG sub-sector are inadequate production and supply as the maximum LPG production capacity of the Tema Oil Refinery is about 52,000 tonnes per year. Thus, there are constraints in discharge infrastructure for the importation of LPG as well as an unfavourable pricing policy.

The Ministry believes the initiative will bring up rural access levels toward the achievement of total nationwide usage at 50 percent soon. This is a laudable initiative, since some people have lost their lives as a result of indoor air-pollution, which is caused by the use of firewood for cooking; and the situation is not the same for those who use cleaner fuels like gas or electricity.

Access to cleaner fuels like LPG for domestic cooking and heating reduces women’s exposure to harmful indoor air-pollution. However, this Paper is wondering about the efficacy of the policy that is targetting rural areas, since subsidies on LPG and other petroleum products have been removed.

With the rate at which the product is experiencing price fluctuations, since the price is pegged at the global market price, this Paper wonders where the rural folk will get money to constantly refill the free cylinders they are to be provided with.

If care is not taken, rural dwellers might be compelled to revisit wood-fuels if the price of LPG should prove prohibitive. Maybe government will have to intervene in the pricing mechanism in order to enable as many rural dwellers as possible to benefit from the policy.