Quantum, Newgas committed to Cylinder Recirculation
A wholly owned Ghanaian company, Quantum, and its associated gas bottling company, Newgas, have expressed commitment to the Cylinder Recirculation Model (CRM).
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Quantum, Sage and Newgas, which are subsidiaries of indigenous group, Arch Holdings that is vertically integrated in different segments of the petroleum downstream value chain in line with regulations, said their commitment stemmed from their involvement in Ghana’s petroleum sector since 2009.
“We are 100 per cent Ghanaian-owned entities, directly employing over 2,000 Ghanaians, and have been active in Ghana’s petroleum sector since 2009,” the Head of Brands and Communication of Quantum, Samuel Bonuedie, told the Daily Graphic.
Correcting misleading impressions that Quantum and its associated companies are foreign-owned businesses and opposed to the involvement of LPG Marketing Companies (LPGMCs) in the CRM, he stressed that “our group is committed to collaborating with all interested stakeholders within the existing regulatory framework to make it a success.”
Mr Bonuedie said at the start of the CRM in October 2017 the group made the strategic decision to apply for a licence to build and operate a bottling plant at a time when other more resourced companies declined to participate due to the financial risks involved.
“We have been committed to this project since 2018, even through the COVID-19 pandemic, and completed the plant late last year.
Consequently, our bottling plant company under the name Newgas, has obtained the necessary permits to operate the plant and begin filling cylinders to operate under the CRM as our licence permits,” Mr Bonuedie explained.
“It is important to clarify that the bottling plant licence does not permit the plant to engage in the distribution and retailing of LPG, which remains the exclusive domain of OMCs and LPGMCs,” he added, explaining that the OMC/LPGMC licence allowed holders to distribute LPG nationwide, a regulation that had been in place for years.
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Background
In 2014, the government committed to the Sustainable Development Goals (SDGs), one of which is the promotion of clean cooking for all by 2030.
The goal aims to transition households using wood fuels to liquefied petroleum gas (LPG), as the continued use of wood fuels leads to serious health issues which kill many, costing the nation both human and financial resources.
It also leads to massive deforestation, contributing to the increased desertification of the country.
In October 2017, the government issued directives to the National Petroleum Authority (NPA) to implement the CRM as the vehicle for the distribution of LPG, particularly for household use, to increase access and improve safety.
New licence regime
Consequently, the NPA developed a licence framework for a new market structure and invited interested companies to apply for licences to build bottling plants.
“As with other licences issued by the NPA, this process is transparent and open to all interested companies,” a spokesperson for the Ghanaian companies said.
Mr Bonuedie explained that consistent with the NPA, it granted licences once the applicant met the set criteria, similar to how licences for Bulk Import, Distributing and Export Companies (BIDECs), Oil Marketing Companies (OMCs), and Liquefied Petroleum Gas Marketing Companies (LPGMCs) were issued.
The NPA regulations provide that based on their business strategy, an LPGMC or OMC can choose to operate in the industrial LPG, commercial, domestic, auto LPG segments or a combination of them.
“Accordingly, we have sought to distribute our filled cylinders along with OMCs and LPGMCs that have expressed interest in partnering with Newgas,” the Head of Brands and Communication of Quantum said.
Benefits of CRM
The main goal of the CRM is to increase LPG penetration and accessibility. It is the government’s objective that OMCs/LPGMCs develop over 5,000 cylinder exchange points across the country to support the model.
Bottling plants are, therefore, required to collaborate with OMCs and LPGMCs to help achieve this.
It is the prerogative of the LPGMC or OMC, however, to choose which bottling plant to work with or to continue operating the current filling system.
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Mr Bonuedie said Newgas had already signed agreements with some OMCs and was in active discussions with others and LPGMCs to develop more cylinder exchange points.
He said the continuous validation, maintenance and recertification of LPG cylinders to reduce the risk of explosions in homes was another significant benefit of CRM.
That was because cylinders collected from the market would be sent to the Ghana Cylinder Manufacturing Company for maintenance and re-validation before finding their way back to a bottling plant, creating a steady stream of business for the national company and keeping their wholly Ghanaian staff in employment.