Former Chief Executive Officer of the National Petroleum Authority (NPA), Mr Alex Mould, has disclosed that the structural problems within the local petroleum industry are to a certain degree, responsible for the increase in fuel prices at the pumps.
Emphasizing on the payment processes in the industry, he indicated that there are presently too many days given as credit to Bulk Oil Distributors and Oil Marketing Companies in the country.
Speaking on the ‘PM Express’ show, he mentioned that while petroleum products shipped into the country are normally sold to consumers within 60 days, suppliers are given 120 credit days.
This, Mr Mould says causes OMCs to “play with the money and when there is a spike in foreign exchange, foreign exchange losses occur.”
“ The problem is they give them too many days as credit. These suppliers because of market forces, give up to a 120 days credit, that means that the BDCs land the product in the country, sell the product to the Oil Marketing Companies, and the Oil Marketing Companies are also given unnecessary long credit.
“People play with the money and when there is a spike in foreign exchange, foreign exchange losses occur. I don’t see why anybody will give 120 days for a product that can be sold, money collected, foreign exchange obtained within 60 days. This is one of the problems we face in the industry.”
Alex Mould
According to him, these suppliers sell petroleum products and give credit to the buyers either through a letter of credit or a supplier’s credit. He further added that When a cargo of petroleum products which is about 35,000 metric tonnes arrives in the country, it is sold within a week and as such they should be able to collect the money and return the money to the supplier within a month.
Mr. Mould called on the NPA to fix the structural problems in the industry by instilling discipline.
“NPA needs to ensure that there is a cross default mechanism that any BDC or Oil Marketing Company that delays in making payments is put on the blacklist and is not supplied products by anybody. This will bring some discipline into the industry.”
Mr Mould
Recent Hike In Fuel Prices
Ghanaians will have to spend more on fuel as prices of petroleum products have gone up again.
The price of diesel has shot up to GH¢23.49 per litre, according to latest prices advertised at some pumps. Petrol is selling at GH¢17.99 per litre, while Kerosene is selling at GH¢14.70.
The new prices took effect from Tuesday, November 1, 2022. This has automatically affected fares as well.
President Nana Addo Dankwa Akufo-Addo on Sunday, October 30, 2022, said his administration is working on bringing affordable petroleum to the country to slow the rampant hikes at the pumps.
He added that the government is working to secure reliable and regular sources of affordable petroleum products for the Ghanaian market. It is expected that this arrangement, when successful, coupled with a stable currency, will halt the increase of fuel prices and bring relief to Ghanaians.
“I know that the increasing cost of living is the number one concern for all of us. It is driven by fast-escalating fuel prices at the pumps, caused by high crude oil prices on the world market and our depreciated currency. I know that this is putting intolerable pressure on families and businesses.”
“I know that people are being driven to make choices they should not have to make, and I know that it has led to the devaluation of the capital of traders and painfully accumulated savings.”
HE Akuffo Addo
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