Business News of 2014-04-10

‘Contract between BOST and Nigerian firm illegal’

The Ghana Chamber of Bulk Oil Distributors has called on the Bulk Oil Storage and Transport Company (BOST) to suspend its contract with a foreign company to manage its petroleum storage facilities.
According to the Chamber, the outsourcing of the facilities to TSL, a Ghanaian subsidiary of a Nigerian-owned company, was in flagrant disregard of the Public Procurement Law of Ghana.
It said the action was also in clear violation and breach of the government’s publicly declared commitment to promote the deepening of Ghanaian local content at all sectors of the economy, especially in the oil and gas industry.
The Chief Executive Officer of the chamber, Mr Senyo Hosi, who made the call said the chamber would petition President John Dramani Mahama on Monday, April 14, 2014 to look into the conditions under which a foreign company was given preference over local companies, all of which had capacities exceeding the TSL.
Speaking at a media briefing after an inspection tour of some bulk oil distribution (BDC) companies in Tema, Mr Hosi indicated that the chamber would do all it could to ensure that the contract was abrogated.
The BOST and TSL deal, he indicated would hurt local BDCs if allowed to go through.
Local BDCs vrs TSL
Currently, there are 22 BDC's with the combined capacity to produce over 270 million litres of oil daily while TSL has three terminals in Nigeria with a combined capacity of 55 million litres.
Mr Hosi questioned the basis for sole sourcing the TSL, stating that "this is no way comparable to the proven capacity of indigenous Ghanaian companies which amount to over 270 million litres. Every single one of the companies you visited today exceed TSL's combined capacity. What then is the technical and competence basis for sole sourcing without regard to local competence?
BDC's were established following a deregulation policy by the National Petroleum Authority, NPA Act 691 (2005) to encourage local participation and investment in the oil downstream sector.
Till date, BDC's Mr Hosi said had invested in excess of $180 million in the construction and operation of tank farms and now accounted for 98 per cent of petroleum product supplies to the market.
"Our function is the reason for the absence of shortages", he stated.
Lack of transparency, fraud
BOST has signed the 12 month pilot deal with the option of a five year extension. TSL according to Mr Hosi has indicated that it would invest about $10 million on CCTVs, SCADA systems, flow meters, tank gauges and gantry upgrade. "This in our opinion is over highly inflated", he stated.
Mr Hosi said the whole transaction was shrouded in secrecy as capable local companies were denied the opportunity to participate in such a major bid.
He said President Mahama must intervene to make good his word of putting local companies first.
Visit
The team led by Mr Hosi visited Cirus Oil Services Limited, a subsidiary of Woodfields Resources Limited, a wholly owned Ghanaian company. The company has two petroleum terminals in Tema and Takoradi in the Western Region.
According to its Head of Terminal Operations in Tema, Mr Gilbert Tomani, Cirus Oil had the capacity to produce 37 million litres and loaded about 120 trucks daily.
The Takoradi Terminal has the same capacity, he said.
Meanwhile, Cirus Oil is constructing a new terminal with the capacity of 106 million litres and can load 200 trucks a day. “ That is phase one. When we finish the phase two in the last quarter of this year, we will have 200 million litres,” he stated.