The National Petroleum Authority (NPA) has reiterated its commitment to reducing operational expenses for liquefied petroleum gas (LPG) traders.
In response to concerns raised by the LPG Marketers Association, the National Petroleum Authority (NPA) reaffirmed its commitment to reducing operational expenses for liquefied petroleum gas (LPG) traders which includes addressing the imposition of an $80 per metric ton (MT) fee on suppliers’ premiums, specifically targeted at bolstering bottling plant and cylinder investment margins.
The Head of Economic Regulation at the NPA, Mr Abass Ibrahim Tasunti, highlighted the authority’s proactive strategy in addressing industry obstacles and securing its enduring viability.
He explained that taxes are the major source of revenue for the government spending so if the government is able to explore other sources of revenue, it will positively affect the current LPG prices as the taxes on them would be removed.
“The other thing NPA has done, whilst waiting for the government to respond to the call for a reduction of taxes, is to find a way to introduce innovative ways to reduce the cost of LPG. So we started discussing with the BDCs that, if you look at the way we used to import LPG, you could have a BDC paying a premium to the international oil trader, up to about $100 per metric tonne,” he said.
He explained that if the NPA could consolidate the quantities of the BDCs, bring it together, and do open competitive tenders, production cost could be significantly reduced.
“So we had these discussions, we planned it, and we started in January this year. The first tender that we did in January to deliver quantity starting from March, we got the premium at $30 per metric ton. This is a huge drop. And we see that this is an advantage for us. So with this huge drop in the premium, the cost of importing LPG, this introduction of the $80 per metric ton helps to make it easy to accommodate the price,” he explained.
