Business News of 2014-06-19

Oil companies warn of imminent fuel shortage in Ghana

The Chamber of Bulk Oil distribution Companies (BDC), has warned of a looming shortage of petroleum products in Ghana as a result of their inability to raise letters of credit to honour supplies.

According to the chamber, petrol stocks as of Wednesday morning may last for only a week.

This, the companies say was a result of government’s inability to pay an amount of Gh¢1.8 billion owed them and which has been accruing since 2011.

“I am not too sure that the cargoes that are scheduled for the third market, BDCs will be able to honour them. We are going to have much demurrage, and I don’t think we will be able to sustain this beyond two weeks,” Mr Senyo Hosi, Chief Executive of the Chamber told Oman FM Wednesday morning.

He said a best case scenario would be two and half weeks because the stocks that are already in the filling stations will still be available but they will not have more as replacement.

“Unfortunately as a result of the mounting debts from subsidies, which government doesn’t budget for and is finding challenges to pay, the finance houses are withdrawing their support for us to supply the market. If I cannot get letters of credit there is no way my supplier will release cargo to me. That is the real situation we face today”, he said.

He said government wants to subsidise fuel just to please the public and that it was time “we stopped the subsidies.”

“I have no problem with government’s decision to subsidise but if you want to subsidise, back it with funds. If you can’t back it, please probably look for a more creative way to subsidise, subsiding en bloc is not the most prudent thing to do.”

“We are running a whole sector down and it would come back in our own faces as a people. Let’s be honest about some of these things, if we don’t have it, we can’t do it and then let’s make the product available to the people at the right prices, then we can sustain it.

Mr Hosi called for honesty in the petrol and pricing sector and said government should not have control over the pricing in the sector.

He said government subsidised US$1.2 billion between 2011 and 2013, an amount which he said was not budgeted for.

“…And if you see how government have challenges funding the things that they have already budgeted for (statutory payments), then you should understand why government would even have bigger challenges trying to fund things it has not budgeted for at all.”

He said the 2014 budget statement, has no provision for the subsidies and that if it continues like this the country will have very serious problems.

He said US$1.2 billion could have built another gas processing plant at Atuabo or it could have been able to build a whole new refinery and save the nation the amount of foreign exchange it uses to import the product and bring pressure on the currency.

“If we want to subsidise mass transportation, that is the prudent thing but I do not think it is prudent to subsidise en bloc for everybody including the V8 driver. What we could have had is to modernise mass transportation in Ghana which makes our dependence on fuel much, much less.”

As it stands now we have no option but to stop supplying, he said. Fuel prices were maintained after the national petroleum authority reviewed them last Monday.