Mr Senyo Hosi, the Chief Executive Officer of the Chamber of Bulk Oil Distribution (CBOD) companies, has suggested that the current problems facing the downstream petroleum market could be attributed to the twin issues of pricing and ability to pay for petroleum products and not risks of supply shortage.
Speaking in an interview on PM Express, Mr Senyo Hosi, underscored that Ghana still has access to the product supply sources for the local market such as Rotterdam, the Arab Gulf and others.
While volatility in world prices is of concern, this is as a result of the worsening geopolitical tensions between Russia and the West. The real problem is having the needed financing to import the products into the market.
“There is no problem with supply, the problem is price and payment. We should forget about arguing price… Ghana is not going to be a maker of price so just forget it. You can’t control petroleum prices in the world. The only you can do is to influence the impact it can have on your market. Because Ghana is just a market taker.”
Senyo Hosi
To be practical, although prices are through the roof, a careful comparison between periods of regulated prices and deregulated prices, consumers are paying less now than they would have paid in the previous era of regulated prices, Hosi said.
“When you see the actual NPA price benchmark, if they were setting it and you see what you’re paying for, I think that you will be chasing the BDCs and OMCs and giving them plaques and awards and asking them how they do it.”
Senyo Hosi
Despite operating a deregulated market, majority of OMCs are struggling to stay afloat, as rates charged at the various service stations do not reflect realistic prices, Senyo Hosi said. It is even more surprising that the OMCs are still able to do business, he remarked.
To some extent, this is because “there are different ways of doing that, either you are stealing from the state or you’re stealing from your bank or your financiers. Somebody is giving something”.
OMCs Face Big Hurdles
OMCs are being laden with a lot of debt “and very soon there will be a crisis on that particular part of the sector. That’s why the banks together with the chamber have taken a proactive step to de-risk and cure this problem,” Hosi said.
“…We have to make sure we properly sanitise the funding structure, because it is the biggest problem you have in this industry; you have a shortage problem when you actually have a funding problem.
“The last time we had a shortage in this country, it was because we had a funding problem created by government’s unpaid subsidies. In recent times, the close shave that we’ve had has always been a funding problem because of challenges with FX. And even when FX was fixed, now we have challenges with the pricing of FX.”
Senyo Hosi
He indicated that sustainability is of the essence. Without this, it is likely a major crisis may surface again in certain sectors such as the banking sector or within the international sphere as a lot of products are funded by the international traders these days. “There are huge holes that are being covered by robbing Peter to pay Paul.”
Candidly, petroleum consumers should not get excited about lower prices, but rather the excitement should be about sustainable pricing and funding. “That’s how BDCs and OMCs can ensure the security of supply of petroleum products,” he said.
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