Adnan Adams Mohammed
A former Chief Executive Officer (CEO) of both downstream and upstream petroluem sector of Ghana has added his vice to the call that government address the structural challenge on how importers, Bulk Oil Distribution Companies (BDCs) acquire foreign currencies for their business.
Alexander K. Mould believes the structural problem of making forex available can be addressed by streamlining the process by BoG working with NPA to make foreign currency available to the commercial Banks of the BDCs;
The call by the former CEO of National Petroleum Authority (NPA) and Ghana National Petroleum Corporation (GNPC) was a followup to concerns raised by an Energy Policy Analyst that the foreign exchange rates used by BDCs and OMCs in determining fuel prices are too high. According to the Analyst, the oil companies used a forex rate of between GHC18 and GHS19 to the dollar in setting the prices in this current price window
“The forex rate they are using is too high ……if they use that forex rate to set prices within two weeks and the cedi depreciates the BDCs will be affected not government,” Benjamin Nsiah said in an interview.
However, Mr Mould has noted that, the long credit period –another structural problem in the industry – is basically to accommodate the challenges in sourcing forex.
In a galloping inflation and galloping exchange rate regime, you can’t wait long to pay back what is owed as the exposure is marked-to- market.
“Availability of forex is the biggest challenge facing the BDCs.”
Me Mould, who is a former corporate banker and a former Executive Director of Standard Chartered Bank, has called on the BDCs and OMCs to better manage their forex trade aspect of their business and suggested some possible ways they could do that.
“Managing the forex exposure is the key risk they face and as such they should be better manager this risk by buying dollars as soon as they sell the fuel, at least on a weekly basis, and not wait till when the Letter of Credit, or suppliers, credit is dues.
“The BDCs should also move away from given OMCs more than 7 days credit.”
“The forex price is unpredictable due to the speculation caused by the short supply and lack of any assurance from BoG of future forex flows; If BoG make any allocation, the allocation willl first go to GOIL then to others.”
Consequently, Mr Nsiah urged the government to work with the BDCs to reach an agreement and sign a Memorandum to reduce the forex rates.
He added that if the BDCs fail to comply, government can elevate Bulk Oil Storage and Transportation Company Limited (BOST) to compete with the BDCs. He added that BOST should be made “to import products into this country and sell it on the market.”
“That 60 million dollars given to BDCs to set the prices, if the government handed it to BOST for instance to import the products, it would help all of us,” he said.
On Tuesday, petrol and diesel prices were sold for an average of ¢18 and ¢23 per litre, from the previous prices of ¢15 and ¢19 per litre respectively.
Presently, the price of crude oil on the world market is relatively stable, selling at $90 per barrel;
Meanwhile, in relieving the Ghanaian from the fuel hikes, Information Minister, Kojo Oppong Nkrumah disclosed that the government is sourcing cheap and affordable petroleum products for supply into the Ghanaian market.
According to him, the National Petroleum Authority (NPA) and the Ministry of Energy will provide further details about the importation of fuel onto the Ghanaian market in the coming days.
He noted that the Energy Ministry had already begun talks with some major sources and sovereigns in the supply of petroleum products.
“In President Kufuor’s time, we did it with Nigeria, Sahara lifting for us and you could have supply credit lines and a fixed price that you could bank on and it is a very similar arrangement that has already commenced and I am expecting that in the coming weeks the NPA, the Energy Ministry will have the opportunity to provide the details,” he said.
