The Ghana Chamber of Bulk Oil Distributors, claims that the depreciation of the Ghanaian cedi is the principal reason for the consistent increase in prices of petroleum products on the market.
Speaking on ‘PM Express’ yesterday, November 2, 2022, Daisy Attu Gyabaa who is Head Cooperate and Industry Operations of Ghana Chamber of Bulk Oil Distributors (CBOD), explained that the poor performance of the cedis to the dollar is why fuel prices are skyrocketing.
“The rate of depreciation is [the greater reason for the high cost of fuel] because, you [BDCs] are not able to predict their risks or factor in what actual rate to use in pricing.”
Daisy Attu Gyabaa, CBOD
In her explanations, she noted that a gap is created when trade is done on the International market in dollars but products are sold in cedis on the Ghanaian market. This gap has accounted for the increase in fuel prices.
“Basically what the BDC’s who are members of my chamber do is to source for fuel from the International market, bring it to Ghana for us [Ghanaians] to buy at the pumps. But we buy our products in dollars and bring them to Ghana. Obviously, we can’t sell in dollars in Ghana and so we translate that FX into cedis and sell to OMCs so the OMCs buy from us in cedis and later they [OMCs] also sell to consumers in cedis.”
Daisy Attu Gyabaa, CBOD
Daisy noted that, since cedis earned from selling on the Ghanaian market must be converted to dollars when paying back International suppliers, there will always be the problem of increasing fuel prices if the cedi does not appreciate.
“We all know what is happened to the cedi, the depreciation, how fast and how high it has been so that’s where the problem lies,” she said.
BDCs Don’t Have Enough FX to Pay Suppliers
The Head Cooperate and Industry Operations of Ghana Chamber of Bulk Oil Distributors (CBOD), Daisy Attu Gyabaa revealed members of her association do not have the needed foreign currency to pay their suppliers.
“We don’t have enough FX to pay our suppliers,” Daisy disclosed.
She acknowledged that the Bank of Ghana (BoG) has been of massive support to BDCs since the beginning of the year. However, the amount the BoG offers them is not enough compared to the FX they need to pay their suppliers
“Beginning of the year, Bank of Ghana intervened by providing guaranteed FX to the industry. But the problem here is they are not able to give us everything we need.”
Daisy Attu Gyabaa, CBOD
She mentioned that on the average members of her outfit need about $400millon dollars per month to help them pay their suppliers. The BoG however is only able to give about $120million dollars monthly.
Daisy added that, they usually go to commercial bankers for additional support which is at a much higher interest rate compared to what the BoG’s offers them.
She further intimated that the concessions from the BoG provides only for about 30% of the monies they need to pay their suppliers. So, though the BoG aids them, the help from the BoG “is not able to translate into pricing.“
READ ALSO: John Mahama Refutes Claims That Sankofa Gas Is The Most Expensive Gas In The World
