GHANA PETROLEUM DOWNSTREAM INDUSTRY

1. GHANA PETROLEUM DOWNSTREAM INDUSTRY

2. Presentation Outline • Introduction • Downstream facts and figures • Role of NPA • Overview of Petroleum Downstream Licensing Process in Ghana • Reasons for working visit

3. Introduction - Ghana Petroleum Sector Transportation and processing (Gas) Refinery, Distribution and Marketing of refined products Oil & Gas Production and Exploration Downstream Midstream Upstream

4. Introduction – Downstream policy objective • Key policy focus for the petroleum downstream is removal of government control (deregulation) with the following objectives: • Price De-control (Price liberalization) – Achieved in 2015 • Removal of restrictions on the establishment and operation of facilities – Achieved in 2004 • Removal of restrictions on the importation of crude oil and petroleum products – Achieved in 1996

5. Introduction – Historical Milestones September 2006: Private sector company licensed to sell wholesale to the OMCs and bulk consumers July 2015: Petroleum Product Price Deregulation 2015 2006 2007 2005 October 2007: Bi-weekly adjustment of petroleum products prices to reflect oil prices on the International market June 2005: The establishment of the National Petroleum Authority (NPA) to oversee the deregulated market in a takeover from the National Petroleum Tender Board

6. Downstream Facts & Figures – Supply chain Aviation Industry Mining Industry Refinery Shipping Storage Marine Industry Importation of crude oil and refined products Retail Market Export Market

7. Downstream Facts & Figures – Service Providers REFINING STORAGE SHIPPING TRANSPORT RETAIL (Local & Export) OMCs (114) LPGMCs (42) Retail Outlets (3,944) Export Companies (26) TOR OTCs (27) BDCs (35) Transport Operators (562) BRVs (3,649) VLTC (1) TOR Platon Oil & Gas Akwaaba Link BOST TOR Depot BDC Storage (11) SUPPORTING COMPANIES LICENSED BY AUTHORITY • Mooring Company (1) • Ghana Ports & Harbor Authority • SPM & CBM (1) • Oil Jetty (2) • Stratification Company (1) • Bunkering Companies (55) • Tank Cleaning (10) • Calibration (9) • Kerosene Outlets (57) • Filling Stations (1,381) • LPG Outlets (666) • Reseller Outlet (168) • Service Station (1,672) • Lubricant Manufacturing Companies (2) • Lube Blending (9)

8. Downstream Facts and Figures - Consumption Total annual consumption of over 4billion litres

9. Downstream Facts and Figures - Storage • Total National Storage capacity of petroleum products is estimated at 1.3 million MT.

10. Role of NPA NPA: Established under NPA act 2005, act 691 as a semi-autonomous agency to regulate, monitor and oversee activities of the downstream Industry

11. Role of NPA – Technical Divisions IM&HSSE • Inspections and Monitoring to ensure compliance with industry standards Technical Divisions PPR • Pricing and price risk management activities • National stocks management and planning • Industry Research and business development UPPF • Unified Petroleum Price Fund Operations • Bulk Road Vehicle Tracking Operations • Primary Distribution Margin Management Quality Assurance • Ensure integrity of quality of products supplied • Save tax revenue otherwise lost to the state • Save misapplied subsidies Licensing • Processing and issuance of licenses and permits

12. Downstream Programmes & Policies

13. Price Deregulation Objective : Removal of government controls in pricing and elimination of subsidies Strategy : Petroleum Service Providers (PSPs) to set their price according to the prescribed PBU formula, PSPs to ensure their company prices are the same throughout the country Successes : Elimination of subsidy, lower competitive prices and higher investor confidence Next Steps : Deregulation of transportation

14. Low Sulphur Fuels Objective : Reduce maximum Sulphur in fuels as follows Diesel: 3000ppm to 50ppm Petrol: from 1000ppm to 50ppm Strategy : BDCs to import at 50ppm diesel and petrol. BDCs started importation of 50ppm in August, 2017 Challenges : No clear indication from TOR about plans to retrofit the refinery.

15. National LPG policy Objective : Adopt an LPG cylinder recirculation policy Strategy : Change of current LPG marketing operations to reflect cylinder recirculation model. Revise the LPG supply chain to include bottling plants, Limitation of current refilling plant marketing of LPG to autogas Successes : Policy was approved by Cabinet in October 2017. Implementation Committee has been formed to plan and oversee the implementation

16. OVERVIEW OF PETROLEUM LICENSING PROCESS IN GHANA

17. LICENSING OF PERTOLEUM SERVICE PROVIDERS Sections 11 (1) and (2) of the NPA Act, Act 691 stipulate that: 1. A person shall not engage in a business or commercial activity in the downstream industry unless that person has been granted a licence for that purpose by the Board. 2. The business or commercial activities of the downstream industry in respect of crude oil, gasoline, diesel, liquefied petroleum gas, kerosene and other designated petroleum products are (a) importation, (b) exportation, (c) re-exportation, (d) shipment, (e)transportation, (f) processing, (g) refining, (h) storage, (i) distribution, (j) marketing, and(k) sale.

18. LICENSING OF PERTOLEUM SERVICE PROVIDERS • Section 30 of the Act also stipulates that ‘A person shall not construct or operate in the petroleum downstream industry(a) a petroleum products retail station,(b) a petroleum products storage depot and pipeline,(c) a liquefied petroleum gas depot, or(d) an oil refinerywithout the prior written authorization of the Board’.

19. LICENSING OF PERTOLEUM SERVICE PROVIDERS • The Licensing Division has outlinedvarious requirements needed to obtain licences and permits for the various categories of PSPs listed. These are available as Public Notices of the NPA (NPA N. 001 to NPA N. 031). • All licence applications are submitted in hard copy at the NPA Head Office in Accra. Applicants are required to pay a non-refundable processing fee for each licence application. • The application is reviewed by the Division and forwarded to the NPA Licensing Committee for further consideration and subsequent approval by the Governing Board. • Upon Approval, applicants will be issued with a licence subject to full payment of the new entrant licence fee.

20. RENEWAL OF LICENCE ***All PSP Licences expire on 31stDecemberof the calender year. In line with Section 15(4) of the NPA Act 2005, (Act 691), all PSPs are required to apply for the renewal of their licences 60 days prior to the expiration of their licences. Documentation Requirements Audited Financial Accounts for previous year Annual Returns as filed at the Registrar Generals Department; Current Directors And Shareholders; and Payment Of Annual Renewal Fee.

21. CONSEQUENCES FOR NON-COMPLIANCE WITH THE REQUIREMENTS FOR THE RENEWAL OF LICENCES • In line with Section 18 of the NPA Act, 2005, (Act 691),failure to comply with the requirements and deadline for the renewal of licences will result in the following: • Sanctions and penalties for late renewal. • Refusal to renew licence. • Withdrawal of licence. • Suspension of licence. • Revocation of licence.

22. REASONS FOR WORKING VISIT • To fully automate licensing procedures to ensure swift processing of all licence applications. • The NPA has already acquired an Enterprise Relational Database Management System to automate some operations. (Phase 1 has been fully deployed) • Phase 2 will include the full automation of licensing procedures. The NPA will require first hand information from the Department of Energy on the implementation challenges and areas of concern in this regard.