Gabriel Kumi, the Vice President of Liquefied Petroleum Gas (LPG) Marketers Association in Ghana has stated that LPG consumption in Ghana has dropped by 12 percent this year, compared to last year, with worse figures expected for the first quarter of this year owing to the incessant increase in prices.

Mr Kumi suggested that the high price of LPG is the primary reason for the drop in consumption and that consumption will only rise if the price comes down.

Mr Gabriel Kumi, meanwhile, warned that the price of LPG will remain high in the country unless taxes are removed. The association’s warning comes as the price of LPG rose by 8% in the current pricing window, despite forecasts that it would fall.

The association urged the government to take a bold step to reduce the price of LPG, stressing that consumption will continue to dwindle without significant action.

The objective of the Ghanaian government is to increase access and penetration of LPG to 50% by 2030, which will require a concerted effort to address the high prices currently facing consumers. The LPG Marketers Association believes that scrapping taxes on LPG would be a significant step towards reducing the price of LPG and encouraging greater consumption.

Mr Kumi stated that the drop in LPG consumption can be singularly attributed to the rise in the price of the product, and there is no other reason behind the decline. He explained that LPG is a product with elastic demand, meaning that consumption is highly responsive to changes in price.

The association is therefore appealing to the government to take a second look at the taxes on the LPG price build-up and consider the negative impact they are having on consumption.

The Need for the Government to Strike A Balance

The call by the LPG Marketers Association highlights the need for the government to strike a balance between revenue generation and consumer affordability. While taxes are essential source of government revenue, they can also have negative consequences for consumers, particularly in a market where prices are already high.

The Ghanaian government will need to carefully consider its options and work with stakeholders in the LPG industry to find a solution that benefits both consumers and the government’s revenue objectives.

The rise In LPG prices in Ghana is not an isolated issue but is part of a broader trend of rising fuel costs around the world. Crude oil prices have been rising steadily, driven by a combination of factors, including supply constraints and rising demand.

The International Energy Agency warned that global oil demand is set to recover to pre-pandemic levels by the end of 2022, putting further upward pressure on prices. This global trend makes it all the more important for the Ghanaian government to take decisive action to address the high prices of LPG in the country.

However, the Liquefied Petroleum Gas Marketers Association’s warning underscored the need for the Ghanaian government to take action to reduce the price of LPG in the country.

Scrapping taxes on LPG is a significant step that could encourage greater consumption, but the government will need to carefully balance its revenue objectives with consumer affordability.

With rising fuel costs being felt around the world, it is crucial that the Ghanaian government acts decisively to address the issue of high LPG prices and work with stakeholders in the industry to find a solution that benefits all parties involved.