The Chamber of Bulk Oil Distributors (CBOD) is livid that government and parastatal are engaging in activities that are collapsing Bulk Oil Distributors.
CBOD identified what it calls covert subsidies, unfair competition and biased access to storage facilities as well as abuse of common infrastructure as some of the said activities.
Senyo Hosi, Chief Executive Officer (CEO) of CBOD raised the concerns in the 2016 report of the Chamber.
GH¢100m covert subsidies for BOST
He explained that the Bulk Oil Storage and Transportation Company (BOST) margin accrues about GH¢100m a year.
In addition, he said allocations of GH¢60million every quarter by the Ministry of Finance from the price stabilisation and recovery levy under the guise of strategic stocks, have provided indirect subsidies for BOST to translate into low pricing for Go-Energy/GOIL.
In effect, he stated that this is a subsidisation of GOIL prices through BOST because the same is not available to the private sector and is designed to suppress pump prices at the expense of the private sector, and fair competitive practices in the economy.
“Explanations justifying the payments from the Price Stabilisation Recovery levy (PSRL) under the guise of strategic stocks is totally moot.
“BOST has stated in many of its presentations that it is running an open account trading arrangement with its suppliers and takes pride in its ability to trade without funding from government.
This has been a well-known fact and flies in the face of assertions that government is investing in strategic stocks.
“These payments help subsidise GOIL indirectly against the private sector,” he added.
Senyo Hosi revealed that an analysis of the pricing offered by BOST reveals a major discrimination in pricing against the private BDCs and in favour of Go-Energy/GOIL.
“In most cases, private BDCs and OMCs must operate at break-even or economic losses to be able to compete with GOIL.
“GOIL, on the other hand, being a beneficiary of the scheme, continues to post profits unmatched in the industry,” he stated.
Senyo Hosi observed that traditionally, government participation in the trading activities of the industry had been limited to the commercial activity of Tema Oil Refinery and GOIL while BOST served as a provider of the infrastructural backbone for the industry and was expected to hold strategic stocks.
“Policy, however, changed with government opting to galvanise the activities of GOIL, Go-Energy, BOST and TOR in an alliance hoping to yield synergies that will make government the most dominant player in the market.
“It was the thinking of Government of Ghana (GoG) officials that the private sector had gained too much control over the downstream oil sector.
“The first move by GoG was to actively participate at every level of the supply chain through refining-importing-storage-distribution-retailing.
“With refining filled by TOR, retailing by GOIL, distribution by Go-Energy, Storage by BOST, importing remained unfilled.
“The import could have been undertaken by Go-Energy as a BDC but government opted to have BOST play the role for strategic reasons which may not hold for a publicly listed company like GOIL/GO-Energy,” he added.
He noted that this compromised BOST as an independent player for the industry and consequently, this set of facts resulted in market distortions and an anti-competitive industry structure that has been destructive for the private sector.
Common Infrastructure Abuse
Senyo Hosi stated that it became normal for TOR to abuse its influence over the use of the Ghana Ports and Harbours Authority (GPHA) oil Jetty as against the open access rule.
He said BDCs on scheduled laycans are forced out of berth for TOR vessels or frustrated in their efforts to discharge their cargo.
In presentations, the last MD of TOR/BOST indicated steps he was taking to leverage its new control of the All Buoy Berth (ABB) to restrict 50% usage to BOST and TOR.
This in effect forces 50% of the trade to BOST/TOR at the expense of the private sector.
These arbitrary acts are a clear abuse of public power and frustrate private investments in the sector.
The cumulative effect of the actions of GoG has been one aimed at suppressing the private sector. This only nurtures an environment for political patronage and rent-seeking.
Unfair Competition
The CEO of CBOD noted that the role of BOST to import and trade as an Oil Trading Company (OTC) made it a player and a referee – a key provider of services and infrastructure support - at the same time.
Consequently, it has since been unable to provide fair services to industry.
He expressed worry about how government uses its infrastructural capacity and Zonalisation policy to reduce competition, compelling BDCs to procure products from it as against the BDCs trading their own products.
Biased Storage Access
According to him, the use of BOST facilities have been biased against private sector importers.
Key complaints lodged by the private sector include;
• The non-adherence to the open access system for operating zonalisation.
• The deprivation of access to products within the entire BOST system after delivery of products into its Accra Plains Depot (APD). This in effect forces the private sector out of the non-shore market zones to buy from BOST as against trading its own products.
• Restricting some gantry usage for Go-Energy and the few private players who may have procured products from BOST. This causes longer queuing and inconveniences for BDCs stocking their own imported products with BOST. Clearly this was aimed at discouraging private players from importing and rather wholly depending on BOST. It was also aimed at giving GOIL a better leverage in the supply chain to out-compete the private OMCs.
The above situation frustrated the smooth implementation of the zonalisation policy.
Source: The Finder
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SENYO, THE NDC GOV'T JUST PLAYED THE GAME TO ROB THE NATION AND FILL THE POCKETS OF THEIR CRONIES. YOU KNOW FOR A FACT THAT THE PROLIFERATION OF FILLING STATIONS BY NDC APPARICHICKS WAS JUST INTENDED TO MILK GHANAIANS BY CREATING A MAFIA THAT WILL JUST BE INCREASING RATES THROUGH DELIBERATE SHORT CHANGING ACTIVITIES TO ENRICH THEMSELVES. I AM ADVOCATING THAT NANA ADDO'S GOV'T SHOULD OBTAIN PART OF OUR OWN OIL DRILLED IN GHANA AS A CONCESSION TO TOR AND SOLD BY GOIL. IF THE OTHERS WANT TO SELL, THEY CAN GO TO TOR, BUY AND SELL. THIS IMPORT IS JUST A WASTE AND SHOULD BE TERMINATED. THE CHANGE THAT HAS COME SHOULD AFFECT THIS OPEN ROBBERY BY THESE SO CALLED BDCs.
GoG has not done any wrong. Those were the days the BDCs were using fuel prices as a weapon against government and perpetuating fraud and financial crime on Ghanaians. If this is in the interest of the common man and national assest, so be it.
This is nosix how could the BDC be given lots of goodies at the expense of the tax payer. How could TOR build and maintain a facility whilst BDCs use it almost free. The guy should tell us how much they when the use the Jetty? Now we have patriots and competent people in charge. If the past government has listen to us those blackmailing BDCs wouldn't have existed.
Massa, this is business, where the motives could not only be profit. You can also give your oil for free.
in as much as i agree with Mr. Hosi on most of the points he raised..i also do believe that the BDC'S should understand that GOIL is a public entity with the GOG having a huge interest in the success of GOIL as a brand. gone were the days when government allowed the BDC'S to dominate in the oil downstream sector at the detriment of the ordinary ghanaian, it is understandable of course that for the private sector profit is key but for government the happiness of the ordinary ghanaian is key. the BDC'S should find other ways of remaining in business under the circumstance.should the current government reverse the current trend we will be back to ground zero again and the BDC'S will be dictating the pace for the GOVERNMENT OF GHANA AND IT'S PEOPLE.
Mr. Senyo is thinking only inside the box without recourse to the ordinary Ghanaian. Government is thinking of Ghanaians in totality. Remember this is purely business on the open market for both public and private. You better come out with proactive strategy to maximize profit.
The CEO of CBOD has said it all. For instance why do we keep paying strategic stocks levy and the BOST margin to BOST only? They operate just like any other BDC and just like any other tank farm operator. What about the private tank farm operators? Why do we keep paying the primary distribution margin to BOST and not the other private tank farm operators? In any case, what is the essence of paying the primary distribution margin? Clearly, BOST under Awuah-Darko was used to kill the private players in the industry. Let GO-Energy also source for its own Forex from the commercial banks as the other BDCs are doing when their LCs are due for payment. Apart from SHELL which sells at a realistic price at the pump, the rest are all bleeding. Is that how we encourage the private Businessman? I think the current Government should take a critical look at this development and address it if it truly supports that the private sector is the engine of growth. To Senyo I say ayikooo for bringing this out now. Even though I expected this rather earlier than now, it is still better late than never. Someone close to the President or the Sector Minister who reads this must tell them......action now.