The Chamber of Bulk Oil Distributors (CBOD) has raised concerns about the government’s proposal to designate the Bulk Energy Storage and Transportation Company (BEST) as the exclusive purchaser of Sentuo Oil Refinery Limited’s output through the Gold for Oil (G40) initiative.
CBOD is urging the Head of the Economic Management Team (EMT) and Vice President, Dr. Alhaji Mahamadu Bawumia, to reconsider this plan.
The Chamber argued that the proposal conflicts with the petroleum downstream sector’s deregulation policy.
“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 program.
“We object to this proposal and respectfully appeal to the Head of the Economic Management Team (EMT), The Vice President, Dr. Alhaji Mahamadu Bawumia, to review this proposal.”
CBOD
The statement further suggests that ensuring the necessary USD liquidity for the G40 program can be accomplished without requiring all of Sentuo Oil Refinery Limited’s (SORL) output to be handled exclusively by BEST, formerly known as Bulk Oil Storage and Transportation Company (BOST).
“CBOD ardently opposes this proposal that would create market challenges and deficiencies, which will in the medium- to long-term, inevitably cripple the downstream sector”, the statement read.
“This policy proposal not only contradicts the government’s mantra of fostering private sector involvement in the industry but also undermines the petroleum deregulation policy efforts, which are working perfectly.
“Further, by sidelining Bulk Oil Import, Distribution, and Export Companies (BIDECs), the government risks stifling competition and hindering the growth of a vibrant private sector within this essential industry.”
CBOD
Additionally, it said the government risks creating a monopolistic market which will negatively impact the downstream sector and the fuel-consuming public at large.
CBOD stated that the G40 program has effectively handed nearly half of the market control to BEST, while Sentuo production only covers about 20% of the market demand.
Concentrating such a significant portion of the market under one entity could negate the benefits of efficiency, lower prices, and the growing expertise seen under deregulation.
Advocating Inclusive Framework for Petroleum Sector Growth
Moreover, CBOD is calling on the government to reconsider this stance and establish a framework that promotes active involvement from all stakeholders, including BEST, BIDECs, and private participants throughout the downstream value chain.
The Chamber advocates for a collaborative approach that capitalizes on the strengths of each entity, believing it would be more advantageous and have a broader positive impact on the industry and the Ghanaian economy.
“Policymakers should recall the contribution of the BIDEC subsector towards national development. As a reminder, BIDECs provided the product needs of the country and made it energy-sufficient during critical moments when Ghana’s peers in the sub-region experienced supply shortages.
“Other contributions include investment in storage infrastructure worth millions of dollars, provision of employment, contribution to GDP as well as contributing significantly to policy making.”
CBOD
The Chamber emphasized its commitment 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.
The Sentuo Oil Refinery Limited (SORL) was conceived as part of the Chinese government’s Belt and Road Development Strategy for the oil and gas industry in China and Africa.
The operation of SORL is expected to drive interconnected development for the West African region and contribute to the local economy.
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