‘The price at which product was imported is locked in’ – NPA explains LPG pricing

Ghana’s monthly LPG import arrangements are cushioning consumers against sharp price increases, the National Petroleum Authority (NPA) has explained.

Abass Tasunti, Director of Economic Regulation and Planning at the NPA, said the tender programme fixes import prices for a month. This means local LPG prices can fall even as international market prices rise.

Speaking on Joy News’ PM Express Business Edition on Thursday, he explained that each cargo typically covers a month’s supply.

“And so, the price at which the product was imported is locked in for that one-month period.”

That arrangement, he said, explains why LPG prices are dropping despite a significant increase in the next pricing window.

“So, if you look at the next window, for example, the price of LPG is going up significantly, but we've seen LPG dropping instead of it going up, and that's because we've already locked in the price at which we imported the LPG from the previous window, which was lower than the current prices.”

The protection, however, depends on the price secured for each cargo. A new monthly consignment bought at a higher price can push local prices up.

Mr Tasunti said this explained the previous sharp increase in LPG prices. The price changed after the month-long arrangement ended. The replacement supply cost more than the product used to set prices the previous month.

The same system is now offering relief. Ghana had already secured its imported LPG at a lower price before the latest increase.

“But going to this window, for example, we have been shielded again, shielded again from a sharp increase for the next window because we've already locked in the price at which the product was brought in, so that helps.”

Mr Tasunti also explained why diesel faces different pressures. He said disruptions to major supply sources reduce the volume available on the market and drive prices up.

He pointed to the Russia-Ukraine war and attacks on Russian refineries as factors affecting diesel supplies.

“So sometimes when the major supply sources are shut or are closed, we don't have enough products on the market, and so it will cause, of course, economics comes in supply and demand factors.”

For LPG consumers, the immediate cushion comes from the import price already secured. The next monthly cargo can change that position, depending on how its purchase price compares with the previous supply.