Securing a safer LPG Market in Ghana: Government must separate LPG activities from the remit of National Petroleum Authority
Liquefied Petroleum Gas (LPG) which is a by-product of natural gas extraction consists mainly of hydrocarbons and are an efficient, clean and cheap source of energy for both commercial and domestic use. Global use of LPG is primarily for domestic cooking and also for heating. Increasing access to LPG use is identified as the most plausible solution path for the attainment of United Nation’s goal of global access to clean cooking energy by 2030 (The World Bank, 2011). In that sense, various national governments have pursued and still pursuing aggressive policies directly or subtly at expanding LPG use. In Ghana, the campaign about LPG use started in the 1990’s and has since seen demand grow steadily especially among households [domestic use] in the urban cities. Demand is expected to reach a minimum of 5.9 million metric tons by the end of 2022 (Tei-Mensah, 2014).
However, the LPG blessing is turning out to be a curse in Ghana owing to recently increased fire outbreaks/accidents especially with commercial Gas outlets across the country. The accidents have claimed hundreds of lives, injured thousands and a lot of properties destroyed. Some statistics claim that since the year 2007, almost two hundred and fifty lives have been lost to LPG accidents (Citi 97.3 FM, 2017) and also since 2013, the country has witnessed eight major gas station explosions.
Although fire accidents [gas plus all other forms of fire accidents] are not the primary cause of death in Ghana (World Health Rankings, 2017), the recent surge in LPG explosions has engaged public attention and subsequent governmental action though somewhat belatedly. The Government’s interim nine-point action fiat issued on the 12th October 2017 following the last devastating explosion of 7th October 2017 was ostensibly to arrest the age-old situation by understanding why the accidents have persisted by way of carrying out an extensive audit of the recent cases. And also most importantly, to put in place adequate measures to robustly prevent future occurrence of such needless accidents. Though commendable, fundamental questions requiring answers still need to be asked including the following; a) what have accounted for the sudden surge in LPG accidents and b) why a long “time-lagged” in government’s response by way of regulation of LPG in Ghana?
The first and foremost important answer to the questions above rest much on Government separating LPG from NPA’s core activities. It would require a legislative regime that solely regulates the LPG industry of Ghana. The LPG market has no specific statutory instrument governing the sector in Ghana. Currently, only a section of the LPG activities is covered under the National Petroleum Authority legislation. In the NPA Act, 2005 [Act 691], only clauses 45- “promotion of retail competition” and 47- “settlement of disputes” speaks directly to issues relating LPG. Undoubtedly, these two clauses are not sufficient to attend to the numerous problems that the LPG sector faces. And so, without sector-specific legal and regulatory measure in place, the industry might not be able to achieve its desired outcome. The LPG market is a promising one and one that offers an opportunity for government, the private sector, citizens and the world to benefit from. The benefits range from the generation of jobs, economic growth, and benefits to the worldwide climate.
WHY THE SURGE IN LPG ACCIDENTS
Following from the institutional weakness identified in the policy and regulatory regime of the LPG market, I further discuss the factors fed on by the regulatory inefficiencies and have manifested themselves through increased accidents.
• Complexities in the permitting process – In the absence of a legislative instrument and framework to coordinate the LPG market meant that permitting system was going to be multiple processes and complicated. Currently, to own an LPG station, one is expected to obtain minimal of eight permits from different agencies including; Environmental Protection Agency (EPA) permit certificate, NPA construction permit, Ghana Standard Authority Verification certification. The rest are the Non-destructive test certificate, Ghana National Fire Service certificate of examination, Development and building permit, facility Insurance certificate, and the Public Liability Insurance. Dealing with all these agencies is complicated and cumbersome. As a result, many LPG owners cut corners in the process of securing the permits. The NPA’s routine but random inspections have revealed that many facilities across the country do not meet required standard and have on occasions closed down such identified facilities. There have also been many instances where the NPA has instructed stations to do the right thing after detecting infractions. At the core of the problem is the permitting and registration regime which is multiple and complex and present incentives for people to cut corners. This has been a significant factor in many accidents experienced recently.
• Increased supply chain corruption – Tema Oil Refinery (TOR) is the only supply source for LPG in Ghana. TOR faces vast inefficiencies in the production and distribution of petroleum product including LPG. On top of the inefficiencies at TOR, is the relatively small number of storage and evacuation LPG facilities in the country. These supply-side constraints have often resulted in the Oil Marketing Companies (OMCs) competing among themselves for deliveries. Though the shortfall in supply is often augmented with LPG imports, the storage constraint persists. These limitations on the part of supply and the growing demand condition has become a leveraging tool for some players in the industry to engage in questionable activities suggestive of corruption. The market force is absent entirely, and the weakness in the NPA have resulted in illegal dealings where OMCs who are well connected gets supplies on regular bases as and when a shortage occurs. Suffice to note that under this confusion state, the consideration of supply is not on OMC’s capacity and compliance but of personal ties and inducement considerations. Also, the transportation of the product presents another potential conduit of corruption and risks. In fact, several of the accidents have occurred at the point of delivery of LPG or during the transportation period. TOR does not have a sufficient number of vehicles to carry LPG across the Country and thus uses private transportation companies for such activities. Many of the hired transport companies have little knowledge about the risks of LPG, and that seems to contribute to the many accidents occurring with LPG. Currently, road transportation is the only system employed to convey LPG and other fuels across the Country. The other different distribution options which are much safer and possibly cheaper like rail and pipeline are not yet in use.
• Weak NPA capacity regarding monitoring and reporting – The NPA as per the NPA Act 691, is the manager of LPG in Ghana. Unfortunately, the NPA seem constrained in the form of human resources to monitor, maintain standards and quality. Even with regards to aspects of LPG business where the NPA has developed sufficient standards for monitoring of standard compliance, the actual tracking has proved difficult due in part to low staffing and weak monitoring technological prowess. The capacity vacuum at NPA has resulted in many LPG station operating below standards. The operators of the stations many of them are not aware or informed about the risks associated with the handling of the product. The administration of LPG is extraordinarily porous and risky. This situation has been possible in part because of the cylinder management system in use in Ghana- private individual owning cylinders. The end-user method works well when the capacity of LPG stations are high and have the requisite skills to detect faulty cylinders when brought for refilling. Unfortunately, because the Gas station workers have weak capacities, they are unable to recognise faults, and many household fires have come as a result of faulty cylinders.
• Low awareness of the dangers of LPG – until recent publicised LPG accidents, many of the accidents in the past went underreported or unreported. General literacy among Ghanaians of hazards of liquefied gas is weak/inadequate. In some instances, however, pure negligence explains peoples attitude towards the handling of LPG. Owing to the low awareness about the dangers and complete absence of public education, handlers of LPG have done so by relying on their basic science knowledge of LPG. How to position the cylinder, what temperature is required for the safety of the cylinder, exposure to rainfall etc. are some of the major areas which result in accidents. Information boards which give tips on how to handle such inflammable substance are conspicuously absent in many of the LPG stations. National television ads that educate and inform about these dangers are seldom if not non-existent. Such has been the lacklustre attitude to risk management not only in the case of LPG but same is true for many other areas where risks are prevalent.
WHY LAGGED GOVERNMENTAL RESPONSE
One wonder why policy response by way of regulations to the dangers of LPG market has delayed that long despite the severity and enormity of LPG risks. Below I attempt some reasons that might have accounted for the lagged in governmental response to the LPG market.
• Stakeholder complexities - the LPG market has many players and is fragmented and across sectors. These stakeholders have different sets of objectives and goals and are under different supervisory Ministries. For Instance, the Ghana National Fire Service is under the Ministry of Interior; the Environmental Protection Agency is under the Ministry of Environment, Science and Technology and the NPA is also under the Ministry of Energy. Management of the different interest of these agencies for the good of the LPG market has not been an easy task for NPA. The NPA itself is overwhelmed with other petroleum-related activities which seem to catch their attention the more. What has exacerbated the situation is also the absence of a functioning LPG association – which must comprise of users, sellers and suppliers. Managing such a complex and weakly functioning body to evolve a bill that ultimately gets legislated would require support either from the users who feel threatened by LPG, the science community – who knows the dangers of LPG and the politicians and policymakers- who have the mandate to champion the course and safety of citizens. Over the past several years there has not been serious efforts by any of these bodies to push for legislation for the sector. The cognitive limitations of people about risk perhaps explain part of this development.
• NPA’s inadequate capacity – it seems clear that to have legislation for LPG was going to depend much on the ability of the NPA to push ahead the reform needed. Initiation of legislation always starts with the agency requiring the law. In this instance, the NPA is to make a case with all the technical evidence to the sector Ministry – Ministry of Energy and the Energy Minister present same to the Attorney General for the commencement of bill making through the Presidency, Cabinet and Parliament. NPA has not exhibited that competence or is just not interested in having LPG curved out the Authority although there is ample evidence of risks requiring regulation.
MITIGATION MEASURES
The trend of accidents with LPG is a national security threat and requires a more serious and robust response. Below are some of the mitigation measures I suggest when implemented might attenuate the risks of LPG use in Ghana. At the core of the mitigation measures is the curtailment of the dangers of handling of gas at both supplier and consumer level under the current arrangement. The suggestions take the form of short-term action and long-term ones.
Short-term measures
• In the short-term, the current system of administration of LPG cannot be varied significantly given the challenges discussed above. However, urgent steps on the part of the government, policymakers as well as relevant stakeholders to improve the situation is required. The Government’s nine-point Cabinet directive is imperative and instructive. It requires the NPA, the Ministry of Energy and other stakeholders to conduct an audit of the process, identify the potential faulty valves within the system and remedy them swiftly to avert future accidents. The audit is critical at this stage as many stations do not meet standards required to operate. The audit would offer the authorities the opportunity to notice at first hand the gravity of the risk and render redress almost immediately to them. The team of experts for this audit must be constituted by technocrats with relevant knowledge of the sector.
• Sustaining the debate that has been generated in the wake of the 7th October 2017 accident is vital to the long-term solution to the problem. Citizen participation in policymaking is essential, and the citizens can only get involved when their views are heard. In the wake of the accidents, the government has been forced to listen to public criticism of the system and the government is much obliged to attend more to the concerns of the general public. Sustaining the discussion would give more significant leverage to public opinion on the future policy perspective for the sector.
• Another immediate measure is for the NPA to alter the timetable for the delivery of LPG to stations especially concerning locations sited in densely populated areas. Currently, there is not a structured timetable that NPA/TOR follows in delivering of LPG to stations. So, LPG supplies are done at any time of the day. Rather than deliver LPG anytime, the NPA could be reducing the risks of accidents if it instituted measures that ensure that LPG is distributed to stations in residential or busy areas are done only at night when human activities are at lowest level. Most of the accidents have occurred during the delivery or transportation stage. This interim measure could positively militate the present risks level significantly.
LONG-TERM MEASURES
Below are some of the long-term actions required to solve the problem on a permanent basis.
• There must be established legislation with clearly spelt out objectives to support and boost the LPG market. It would require decoupling of the LPG from the authority of NPA. A new body dedicated to LPG activities, in my opinion, would ensure the full exploitation of the LPG value chain benefits and adequate policy and regulatory regimes and frameworks formulated and implemented for the betterment of the sector and the players. Without such independent body, designing and enforcement of standards would continue to face challenges due chiefly to the heavy workload of the NPA.
• Another area that requires reform is the harmonisation and synchronisation of the various permitting regimes. There is the need to reduce the desire and opportunity for any person to cut corners. Harmonising the permitting system where at the one-stop shop, all these permits could be obtained would reduce the incentives for people not following the due process. It would also require that the human resources capacity of the new authority be apt and capable of handling the crosscutting risks in the LPG industry. And even have the skills to draw on the support of the other stakeholders in guaranteeing safety for the LPG stations as well as the consumers who patronise their service.
• There is also the need to have enhanced risk monitoring and reporting standards for the sector. Also, the capacity gaps identified with the current structure must be reduced to the barest minimum. Three levels of education and campaigns must be encouraged. The first is education among customers; the other is the dealers and finally the LPG technical level training for the industry’s critical players.
CONCLUSION
A functioning LPG market presents multifold benefits to the Ghanaian economy. The most significant in my opinion is the potential to reduce the usage of other forms of fuels by increasing the use of LPG and its consequential impact on the global climate. The primary source of fuel in Ghana just like any other developing nation is firewood which is associated with all kinds of problems from health to environment. LPG use attenuates these challenges to their lowest level and makes our climate less warm. The economic benefits are enormous, and the potential is yet to be realised.
The increased public interest in the matter is forcing the government to act. Let’s continue to push the government to get the job done and as Elbert Hubbard said…“A little more persistence, a little more effort, and what seemed hopeless failure may turn to glorious success”. The benefits to come from a well-regulated LPG market are massive and regulating the inherent risks is a sure means to securing these benefits.
However, the LPG blessing is turning out to be a curse in Ghana owing to recently increased fire outbreaks/accidents especially with commercial Gas outlets across the country. The accidents have claimed hundreds of lives, injured thousands and a lot of properties destroyed. Some statistics claim that since the year 2007, almost two hundred and fifty lives have been lost to LPG accidents (Citi 97.3 FM, 2017) and also since 2013, the country has witnessed eight major gas station explosions.
Although fire accidents [gas plus all other forms of fire accidents] are not the primary cause of death in Ghana (World Health Rankings, 2017), the recent surge in LPG explosions has engaged public attention and subsequent governmental action though somewhat belatedly. The Government’s interim nine-point action fiat issued on the 12th October 2017 following the last devastating explosion of 7th October 2017 was ostensibly to arrest the age-old situation by understanding why the accidents have persisted by way of carrying out an extensive audit of the recent cases. And also most importantly, to put in place adequate measures to robustly prevent future occurrence of such needless accidents. Though commendable, fundamental questions requiring answers still need to be asked including the following; a) what have accounted for the sudden surge in LPG accidents and b) why a long “time-lagged” in government’s response by way of regulation of LPG in Ghana?
The first and foremost important answer to the questions above rest much on Government separating LPG from NPA’s core activities. It would require a legislative regime that solely regulates the LPG industry of Ghana. The LPG market has no specific statutory instrument governing the sector in Ghana. Currently, only a section of the LPG activities is covered under the National Petroleum Authority legislation. In the NPA Act, 2005 [Act 691], only clauses 45- “promotion of retail competition” and 47- “settlement of disputes” speaks directly to issues relating LPG. Undoubtedly, these two clauses are not sufficient to attend to the numerous problems that the LPG sector faces. And so, without sector-specific legal and regulatory measure in place, the industry might not be able to achieve its desired outcome. The LPG market is a promising one and one that offers an opportunity for government, the private sector, citizens and the world to benefit from. The benefits range from the generation of jobs, economic growth, and benefits to the worldwide climate.
WHY THE SURGE IN LPG ACCIDENTS
Following from the institutional weakness identified in the policy and regulatory regime of the LPG market, I further discuss the factors fed on by the regulatory inefficiencies and have manifested themselves through increased accidents.
• Complexities in the permitting process – In the absence of a legislative instrument and framework to coordinate the LPG market meant that permitting system was going to be multiple processes and complicated. Currently, to own an LPG station, one is expected to obtain minimal of eight permits from different agencies including; Environmental Protection Agency (EPA) permit certificate, NPA construction permit, Ghana Standard Authority Verification certification. The rest are the Non-destructive test certificate, Ghana National Fire Service certificate of examination, Development and building permit, facility Insurance certificate, and the Public Liability Insurance. Dealing with all these agencies is complicated and cumbersome. As a result, many LPG owners cut corners in the process of securing the permits. The NPA’s routine but random inspections have revealed that many facilities across the country do not meet required standard and have on occasions closed down such identified facilities. There have also been many instances where the NPA has instructed stations to do the right thing after detecting infractions. At the core of the problem is the permitting and registration regime which is multiple and complex and present incentives for people to cut corners. This has been a significant factor in many accidents experienced recently.
• Increased supply chain corruption – Tema Oil Refinery (TOR) is the only supply source for LPG in Ghana. TOR faces vast inefficiencies in the production and distribution of petroleum product including LPG. On top of the inefficiencies at TOR, is the relatively small number of storage and evacuation LPG facilities in the country. These supply-side constraints have often resulted in the Oil Marketing Companies (OMCs) competing among themselves for deliveries. Though the shortfall in supply is often augmented with LPG imports, the storage constraint persists. These limitations on the part of supply and the growing demand condition has become a leveraging tool for some players in the industry to engage in questionable activities suggestive of corruption. The market force is absent entirely, and the weakness in the NPA have resulted in illegal dealings where OMCs who are well connected gets supplies on regular bases as and when a shortage occurs. Suffice to note that under this confusion state, the consideration of supply is not on OMC’s capacity and compliance but of personal ties and inducement considerations. Also, the transportation of the product presents another potential conduit of corruption and risks. In fact, several of the accidents have occurred at the point of delivery of LPG or during the transportation period. TOR does not have a sufficient number of vehicles to carry LPG across the Country and thus uses private transportation companies for such activities. Many of the hired transport companies have little knowledge about the risks of LPG, and that seems to contribute to the many accidents occurring with LPG. Currently, road transportation is the only system employed to convey LPG and other fuels across the Country. The other different distribution options which are much safer and possibly cheaper like rail and pipeline are not yet in use.
• Weak NPA capacity regarding monitoring and reporting – The NPA as per the NPA Act 691, is the manager of LPG in Ghana. Unfortunately, the NPA seem constrained in the form of human resources to monitor, maintain standards and quality. Even with regards to aspects of LPG business where the NPA has developed sufficient standards for monitoring of standard compliance, the actual tracking has proved difficult due in part to low staffing and weak monitoring technological prowess. The capacity vacuum at NPA has resulted in many LPG station operating below standards. The operators of the stations many of them are not aware or informed about the risks associated with the handling of the product. The administration of LPG is extraordinarily porous and risky. This situation has been possible in part because of the cylinder management system in use in Ghana- private individual owning cylinders. The end-user method works well when the capacity of LPG stations are high and have the requisite skills to detect faulty cylinders when brought for refilling. Unfortunately, because the Gas station workers have weak capacities, they are unable to recognise faults, and many household fires have come as a result of faulty cylinders.
• Low awareness of the dangers of LPG – until recent publicised LPG accidents, many of the accidents in the past went underreported or unreported. General literacy among Ghanaians of hazards of liquefied gas is weak/inadequate. In some instances, however, pure negligence explains peoples attitude towards the handling of LPG. Owing to the low awareness about the dangers and complete absence of public education, handlers of LPG have done so by relying on their basic science knowledge of LPG. How to position the cylinder, what temperature is required for the safety of the cylinder, exposure to rainfall etc. are some of the major areas which result in accidents. Information boards which give tips on how to handle such inflammable substance are conspicuously absent in many of the LPG stations. National television ads that educate and inform about these dangers are seldom if not non-existent. Such has been the lacklustre attitude to risk management not only in the case of LPG but same is true for many other areas where risks are prevalent.
WHY LAGGED GOVERNMENTAL RESPONSE
One wonder why policy response by way of regulations to the dangers of LPG market has delayed that long despite the severity and enormity of LPG risks. Below I attempt some reasons that might have accounted for the lagged in governmental response to the LPG market.
• Stakeholder complexities - the LPG market has many players and is fragmented and across sectors. These stakeholders have different sets of objectives and goals and are under different supervisory Ministries. For Instance, the Ghana National Fire Service is under the Ministry of Interior; the Environmental Protection Agency is under the Ministry of Environment, Science and Technology and the NPA is also under the Ministry of Energy. Management of the different interest of these agencies for the good of the LPG market has not been an easy task for NPA. The NPA itself is overwhelmed with other petroleum-related activities which seem to catch their attention the more. What has exacerbated the situation is also the absence of a functioning LPG association – which must comprise of users, sellers and suppliers. Managing such a complex and weakly functioning body to evolve a bill that ultimately gets legislated would require support either from the users who feel threatened by LPG, the science community – who knows the dangers of LPG and the politicians and policymakers- who have the mandate to champion the course and safety of citizens. Over the past several years there has not been serious efforts by any of these bodies to push for legislation for the sector. The cognitive limitations of people about risk perhaps explain part of this development.
• NPA’s inadequate capacity – it seems clear that to have legislation for LPG was going to depend much on the ability of the NPA to push ahead the reform needed. Initiation of legislation always starts with the agency requiring the law. In this instance, the NPA is to make a case with all the technical evidence to the sector Ministry – Ministry of Energy and the Energy Minister present same to the Attorney General for the commencement of bill making through the Presidency, Cabinet and Parliament. NPA has not exhibited that competence or is just not interested in having LPG curved out the Authority although there is ample evidence of risks requiring regulation.
MITIGATION MEASURES
The trend of accidents with LPG is a national security threat and requires a more serious and robust response. Below are some of the mitigation measures I suggest when implemented might attenuate the risks of LPG use in Ghana. At the core of the mitigation measures is the curtailment of the dangers of handling of gas at both supplier and consumer level under the current arrangement. The suggestions take the form of short-term action and long-term ones.
Short-term measures
• In the short-term, the current system of administration of LPG cannot be varied significantly given the challenges discussed above. However, urgent steps on the part of the government, policymakers as well as relevant stakeholders to improve the situation is required. The Government’s nine-point Cabinet directive is imperative and instructive. It requires the NPA, the Ministry of Energy and other stakeholders to conduct an audit of the process, identify the potential faulty valves within the system and remedy them swiftly to avert future accidents. The audit is critical at this stage as many stations do not meet standards required to operate. The audit would offer the authorities the opportunity to notice at first hand the gravity of the risk and render redress almost immediately to them. The team of experts for this audit must be constituted by technocrats with relevant knowledge of the sector.
• Sustaining the debate that has been generated in the wake of the 7th October 2017 accident is vital to the long-term solution to the problem. Citizen participation in policymaking is essential, and the citizens can only get involved when their views are heard. In the wake of the accidents, the government has been forced to listen to public criticism of the system and the government is much obliged to attend more to the concerns of the general public. Sustaining the discussion would give more significant leverage to public opinion on the future policy perspective for the sector.
• Another immediate measure is for the NPA to alter the timetable for the delivery of LPG to stations especially concerning locations sited in densely populated areas. Currently, there is not a structured timetable that NPA/TOR follows in delivering of LPG to stations. So, LPG supplies are done at any time of the day. Rather than deliver LPG anytime, the NPA could be reducing the risks of accidents if it instituted measures that ensure that LPG is distributed to stations in residential or busy areas are done only at night when human activities are at lowest level. Most of the accidents have occurred during the delivery or transportation stage. This interim measure could positively militate the present risks level significantly.
LONG-TERM MEASURES
Below are some of the long-term actions required to solve the problem on a permanent basis.
• There must be established legislation with clearly spelt out objectives to support and boost the LPG market. It would require decoupling of the LPG from the authority of NPA. A new body dedicated to LPG activities, in my opinion, would ensure the full exploitation of the LPG value chain benefits and adequate policy and regulatory regimes and frameworks formulated and implemented for the betterment of the sector and the players. Without such independent body, designing and enforcement of standards would continue to face challenges due chiefly to the heavy workload of the NPA.
• Another area that requires reform is the harmonisation and synchronisation of the various permitting regimes. There is the need to reduce the desire and opportunity for any person to cut corners. Harmonising the permitting system where at the one-stop shop, all these permits could be obtained would reduce the incentives for people not following the due process. It would also require that the human resources capacity of the new authority be apt and capable of handling the crosscutting risks in the LPG industry. And even have the skills to draw on the support of the other stakeholders in guaranteeing safety for the LPG stations as well as the consumers who patronise their service.
• There is also the need to have enhanced risk monitoring and reporting standards for the sector. Also, the capacity gaps identified with the current structure must be reduced to the barest minimum. Three levels of education and campaigns must be encouraged. The first is education among customers; the other is the dealers and finally the LPG technical level training for the industry’s critical players.
CONCLUSION
A functioning LPG market presents multifold benefits to the Ghanaian economy. The most significant in my opinion is the potential to reduce the usage of other forms of fuels by increasing the use of LPG and its consequential impact on the global climate. The primary source of fuel in Ghana just like any other developing nation is firewood which is associated with all kinds of problems from health to environment. LPG use attenuates these challenges to their lowest level and makes our climate less warm. The economic benefits are enormous, and the potential is yet to be realised.
The increased public interest in the matter is forcing the government to act. Let’s continue to push the government to get the job done and as Elbert Hubbard said…“A little more persistence, a little more effort, and what seemed hopeless failure may turn to glorious success”. The benefits to come from a well-regulated LPG market are massive and regulating the inherent risks is a sure means to securing these benefits.
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