Bulk Oil Distributors object to government’s plan to designate BEST sole off-taker

The Chamber of Bulk Oil Distributors (CBOD) has objected to government’s plan to designate the Bulk Energy Storage and Transportation Company (BEST) as the sole off-taker for Sentuo Oil Refinery Limited’s production under the Gold for Oil programme (G40).

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 Mahamudu 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.