Business News of 2014-06-28

Stop restricting BDCs – PEF tells gov’t

The Chief Executive Officer of the Private Enterprises Federation (PEF), Nana Osei Bonsu says government has no business in interfering in the market activity of the Bulk Oil Distribution Companies (BDCs).

He accused government of making it difficult for private sector businesses such as the BDCs to operate. Nana Bonsu explained that “BDCs are private sector players who import a product, incur some costs and borrow from the banks. Now, they have almost exhausted their line of credit with the banks making the banks also at risk of default. If these two private sector players default, that is going to be very detrimental to the economy.”

Speaking at the Citi FM’s roundtable discussion at the Coconut Grove Regency Hotel in Accra, the PEF boss advised government to “wake up and allow the private sector businesses to run their activities without any hindrance. According to him, the provision of subsidies on petroleum product is “a delay in the recovery of the full cost of the pricing.”

“Unless Government can refund all the areas to the BDCs they are at a crossroads where they can fail. If they fail, they will take the banks with them,” he said. He went on to highlight the fact that the inefficient electricity supply in the country has led to a higher demand for petroleum products to power generators that are now the maximum source of electricity for many businesses.

“If businesses want to operate, they now have to buy generators and if there is an additional cost of petroleum that will feed the generator, then they’ll have to bear additional cost of utility to do their business.”

He was of the view that there is a need for a discussion not only to identify where the problems facing economy and the mechanisms needed to boost growth. He said: “We cannot take bandage solutions to fix the hurricane of a problem that is sweeping us at this juncture. This is about mechanisms of pricing a product that is essential and we going about it in the wrong way.”

Ghanaians are currently experiencing fuel shortage due to the refusal of the BDCs to sell their stock of fuel.

The BDCs say they are unable to supply petroleum products because government has not paid an amount of over GHC 1.5billion due them from subsidies. Even though government has reportedly released $60 million to the BDCs, the fuel shortage has not eased.

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