Gov't Explains Recent Shortage Of LPG

Background of the Recent Shortage of LPG

(10th - 16th June): A vessel with LPG consignment could not berth at Tema to discharge LPG for Ghana because when it arrived, the Tema oil jetty was occupied by another vessel discharging products. This vessel with the LPG was expected earlier but could not arrive on schedule because it had encountered a delay at the loading port in Equatorial Guinea. The vessel waited for its turn and discharged LPG for Ghana and returned. Upon arrival in Equatorial Guinea, it could not reload as planned because it missed its schedule. These delays created some shortages in supply, but by June 16th, a vessel arrived to deliver 6,500mt and by 20th June, it completed discharging all of it. This disruption of two-supply delays has far reaching consequences on the rather tight arrangement we have with LPG.

Our Stock Position Now:

The Tema Oil Refinery (TOR), on Monday (20-6-2011) supplied almost 1000KG of LPG to the market. What it has left in store as at Wednesday Morning (0900HRS) was 5,100KG. We are expecting additional consignment of 4,000MT next week (29-6-2011). Presently, TOR is continuing with its weekly production of 1000MT whilst imports are expected to augment the local output. These outputs are against the background that we are consuming about 4-5000MT every week, in the meantime our entire storage capacity is about 6,500MT. This situation leaves us with a buffer of between 1,500-2000MT only which can sustain us for only three (3) days. These result in shortages whenever a vessel misses its berthing schedule.

What are the constraints?

The National Petroleum Authority would like to draw the attention of the consuming public to the following constraints faced with the delivery of LPG in Ghana. These constraints are mainly in the supply chain and are as follows:

1. Berth Constraint

Ghana’s only oil jetty located in Tema is ‘a single multi-user’ by this mean, same oil jetty serves all Ghana’s petro-chemical needs. For instance, the jetty is used by TOR for import of LPG and export of Naphtha and Residual Cracked Fuel Oil, Tema Lube Oil also uses the same jetty for import of Base Oil and all Bulk Distribution Companies (BDCs) use it for the import of all other petroleum products which are also needed most. These factors result in a tight schedule with very little or no-room for slips in laycan-(exact dates of arrival for vessels).

2. Pumping Constraint:

The single pipeline from the Jetty to TOR is approximately 5km in distance and 6inch in diameter. This small diameter pipeline only allows a flow-rate of 60 to 70MT an hour which takes between 4 to 5 days to deliver an average cargo of 5000mt of LPG. In other words about 30 to 40 trucks a day (median truck size is 20mt) and takes between 9 to 10 hours to complete.

3. Storage:

TOR can store almost 7,000MT and this is the whole capacity of the entire country.

4. Delivery Constraints:

Under normal circumstance, TOR can discharge about 1000MT of LPG to the market per day and regular daily demand is 700MT. However, in times like this, they can stretch it to about 900mt by working extra hours including weekends to meet the high demand. It must be noted, this must be done with all the safety concerns in mind.

The peculiar nature of Ghana’s LPG supply cycle as enumerated above is such that a disruption of two (2) days to the cycles causes shortages of 1 to 2 weeks flow of supplies as consumers resort to panic buying. This is the reason why even though products are being supplied to the market now, pockets of shortages still exist in some parts of the country. We have noticed that the long queues have been abating as the backlog of supply has been cleared and we have returned to normalcy soon.

The Way Forward

TOR to submit cost proposal, with defined timelines, to expand the pipelines, add boosters and other modifications to ensure quicker discharge by tankers to TOR storage.

BOST to advice on how to accelerate the project to have a Barge System at both Tema and/or Takoradi Ports which will directly dispense LPG to the Oil Marketing Companies (OMCs) Bulk Road Vehicles (BRVs, or Tankers). This strategy will be independent of the current jetty and free from delays arising from queues.

NPA to conduct an in-depth nationwide study on the demand (domestic and vehicles) and supply of LPG in the country and to advice the Ministry on Medium to long term solutions to the perennial shortages of LPG all over the country.

NPA is also liaising with the Association of Oil Marketing Companies (AOMCs) to ensure that LPG companies extend equal supplies of LPG to the three northern regions and Brong Ahafo noted to have acute shortages of the commodity.

The NPA is also working with TOR to ensure that vessels with LPG berth weekly to deliver product to augment the shortfall from TOR’s production. The immediate strategy is to increase the local stock levels for LPG to clear all backlogs of supplies created as a result of the two-delay in product delivery.

Issued By:

The PR & Consumer Service Department

National Petroleum Authority

The Centurion House # 11, 5th Circular Road, Cantonments-Accra

Website: www.npa.gov.gh