The Chamber of Bulk Oil Distributors (CBOD) has commended government for the payment of legacy debts to the Bulk Distribution Companies (BDCs).
In a statement in its industry report launched yesterday, there was progress made on government’s legacy debt to BDCs, with the payment of all outstanding principal sums (US$427.11mn) and validation of the interest components.
According to the report, this brings the total an amount of US$806.25 million in subsidies incurred by government through its subsidy policy between 2011 and 2015.
The report read: “A total of US$929.58million has been paid between 2011 and September 2019, with a total of US$52.62million outstanding and expected to be paid by year end 2019. The total haircut accepted by BDCs amounts to US$432m.”
Supported by the African Centre for Energy Policy (ACEP), the report also talks about steps taken by the National Petroleum Authority (NPA) to address fuel smuggling in the downstream petroleum sector.
On the issue of LPG policy intervention, the report projects disruption in the LPG market structure. It anticipates the likelihood of upward pressure on pre-tax prices of LPG and disruptions in the marketing and retailing structure of the LPG industry. It also projects significant disruptions in the retail market structure for LPG.
“The LPG Marketing Companies’ (LPGMCs) dominance of the market (62% share) is expected to be threatened by the more consumer-friendly Oil Marketing Companies (OMCs) (38% share), which are generally more accessible by virtue of their location and significantly out-number the LPG outlets by a ratio of about 5:1.”
Other key issues highlighted in the report are fuel quality policy; licence rationalization; Health, Safety, Security and Environment policy; Ghanaian Content and Ghanaian participation policy.
Again, the report calls on LPGMCs to invest in consumer-friendly outlets which are likely to improve their businesses.
“It may be necessary that LPGMCs swiftly invest in multiple consumer-friendly outlets – like self-service propane outlets in the US which are operated at supermarkets, and develop a delivery-to-consumer option to stand a fighting chance of maintaining their market share.”
Also, it revealed that GH¢952 million was saved from blocking the sale of illicit sale of petroleum products in the country in 2018. This was a reversal from the losses made in the last three years – 2015 to 2017- through unaccounted stock and evasion of taxes.
The savings, according to the report, was as a result of interventions by the National Petroleum Authority (NPA) to curb the illicit trade of petroleum products and ensure that it was sold through official channels, the annual report of the Chamber of Bulk Oil Distributors (CBOD) has said.
“In 2018, no loss related to unaccounted stocks is estimated as it was revealed that 574.25 million litres more than the official stocks saleable in the country were sold. This indicates that smuggled stocks in the monitored depots must have been trapped as a result of the NPA’s regulatory interventions to curb the illicit trade of petroleum products and forced to be sold through official channels.
“This saved the nation GH¢797.49 million in taxes and GH¢154.93 million in regulatory margins yielding a total savings of GH¢952.42 million,” the report stated.
According to the report, the NPA, aided by elements of the central government made progress towards tackling the challenges of smuggling and tax evasion some of which were covered in the 2017 CBOD industry report.
“This was a welcome move in the industry and yielded tangible results even though there remains a lot to be done to bring sustainable finality to the illegal trade,” the report stated.
Source: B&FT Online