The Distributors said the proposal contradicted the deregulation policy governing the petroleum downstream sector, expressing concerns that it aimed to indirectly control the exchange rate by channelling Sentuo Oil Refinery’s cedi liquidity through Bulk Oil Storage and Transportation Company (BOST) to manage USD allocations under the G40 programme.  

A statement issued in Accra by Dr Patrick Ofori, the Chief Executive of CBOD, in a plea directed at Dr Alhaji Mahamadu Bawumia, the Vice President and Head of the Economic Management Team (EMT), urged a reconsideration of the proposal, asserting that achieving the necessary USD liquidity for the G40 programme could be accomplished without tying Sentuo Oil Refinery’s entire output to BEST.  

“We are convinced that this plan is inconsistent with the deregulation policy that guides the activities of the petroleum downstream sector. We are informed that the plan has been necessitated by the government’s aim to control the exchange rate by indirectly ceding Sentuo Oil Refinery’s cedi liquidity through BEST for the latter to manage USD allocations under the G40 programme,” it said.  

The statement appealed to the Vice President to review this proposal.  

It said providing the needed USD liquidity under the G40 programme could still be achieved without necessarily anchoring the entire output of Sentuo Oil Refinery Limited (SORL) with BEST.  

The statement said the proposal had the potential of market challenges and deficiencies that could detrimentally affect the downstream sector in the medium to long term.  

It asserted that the proposal undermined government efforts to foster private sector involvement and contravened the successful petroleum deregulation policy.  

“By sidelining Bulk Oil Import, Distribution and Export Companies (BIDECs), the government risks stifling competition and impeding the growth of a robust private sector within the industry,” it said.  

It warned of the risk of creating a monopolistic market controlled by a single entity, which could negatively impact both the downstream sector and the fuel-consuming public.  

The Chamber emphasised the need for a framework that promoted active participation from all stakeholders, including BEST, BIDECs, and private entities across the downstream value chain.  

“The government risks creating a monopolistic market which will negatively impact the downstream sector and the fuel–consuming public at large and the G40 programme has nearly given 50 per cent control of the market to BEST whereas Sentuo production accounts for 20 per cent of the market needs,” it said.  

It said having a single player control such a monumental share would rob the market of the benefits of efficiency, lower prices and growing local market expertise that the deregulation policy had occasioned.  

The statement said significant contributions of the BIDEC subsector to national development, include ensuring energy sufficiency during supply shortages and investing in storage infrastructure.  

It urged policymakers to reconsider their stance and adopt a collaborative approach that leveraged the strengths of all entities.  

The statement reiterated the Chamber’s commitment to collaborating with the government to develop a G40 framework that fostered fair market practices, transparency, innovation, sustainability, and efficiency within Ghana’s downstream petroleum sector.  

“The Chamber is committed to working with the government to develop a workable G40 framework that fosters fair market practices and transparency while promoting innovation, sustainability and an efficient downstream petroleum sector in Ghana,” it said.  

READ ALSO:

• FDA collaborates with importers to address challenges

• Traders urged to utilize FDA’s Progressive Licensing Scheme for product registration

The Chamber said its assessment of the variables that influence prices at the pumps, particularly the exchange rate, had been stable in the last week, adding that the situation may not have any huge impact on prices of petrol, diesel, and Liquefied Petroleum Gas (LPG). 

Speaking to journalists in Accra, Dr Patrick Kwaku Ofori, Chief Executive Officer, CBOD, dismissed reports claiming that prices of petrol and diesel would hit at least GHS18 per litre by next week. 

“Despite the fear-mongering that the dollar was going to close at GHS 14, to be fair, it has been relatively stable, which is far better than what happened the previous weeks. 

“Now the price is GHS14.99 (per litre). It’ll get to GHS18 (per litre) unless the dollar hits maybe GHS15, but I can’t foresee the dollar hitting even GHS14 by even next week,” he said. 

Dr Ofori urged the public and “energy experts” to desist from churning out uniformed projections that could trigger fear among consumers and influence investments in the sector. 

He said the Chamber was concerned about the influence of such speculation on consumer behaviours and the volatility of prices at the pumps. 

He announced plans by CBOD to organise training courses for journalists on the components of fuel pricing and market dynamics among other informative engagements to help reduce misinformation around fuel pricing. 

“We should be guided with some of our utterances. Forex commodities are sensitive to key elements within the sector and the economy. When people make certain speculations that are projections, we need to probe further,” he said. 

After maintaining relative stability for months, fuel prices recorded repeated hikes in the last four weeks, with analysts blaming the situation on spike in international prices and depreciation of the Cedi against the US Dollar. 

Currently, petrol and diesel are trading at an average GHS14.99 and GHS14.80 per litre at the pumps. 

Dr Ofori said the performance of the Cedi against the Dollar and prices on the international markets were the major variables that had influenced fuel price hikes in recent weeks. 

He said the Chamber was exploring innovative avenues to enhance access to forex and reduce pressure on the Cedi. 

Dr Ofori said contrary to claims that bulk oil distributors benefited from fuel price increments, the BDCs sometimes incurred losses if their projections of the forex market exceeded expectations.  

Assessing the situation on the international market, he expressed worry that ongoing tensions in the Middle East could affect global fuel prices if the exchanges between Israel, Iran, and Gaza escalated. 

“We do not want the situation to escalate. Once it escalates, we should be certain that oil prices will go up,” he said. 

ALSO READ:

• Fuel prices cross 14 cedis per litre

• Cedi depreciation to blame for surge in fuel prices – COPEC