Don’t reduce fuel prices — Bulk oil distributors

The Ghana Chamber of Bulk Oil Distributors (CBOD) has appealed to the government to not reduce the prices of fuel despite the fall of crude oil prices on the international market.

“Reducing petroleum prices is likely going to lead to shortages because the Bulk Oil Distributors (BDCs) are currently owed by the government,” the Chief Executive of the CBOD, Mr Senyo Hosi, said in an interview with the Daily Graphic in Accra yesterday. 

According to him, government’s liability to the BDCs currently “stands around GH¢1.5 billion and since the last payment, we have not had funds paid to us directly from government coffers.

“The pricing has become the primary tool that the government uses to pay us the debt and even at current rate, it will take well over 10 months to pay the 2013 debt before we look at 2014,” Mr Hosi said.

After the 17.5 per cent increment in the prices of fuel after the budget presentation last month, at the pump, the price of premium petrol is  3.04 per cent higher ; gas oil (diesel) 3.13 per cent and 2.85 per cent on kerosene, used in rural areas mostly by the poor. 

Funding confidence

Mr Hosi said any attempt by the government to reduce petroleum prices “will result in dampening funding confidence which will inevitably affect our chances of accessing letters of credit (LCs) from the banks.”

The Chief Executive said the businesses of the BDCs were suffering because of the interest payments they were making on loans they had taken from the banks.

He questioned why the very people calling for a reduction in petroleum prices did not do same when the prices soared earlier this year.

“When the debt was accruing at the time that the prices were going up, none of us was ready for an automatic adjustment and now that prices are dropping, the same people are calling for automatic adjustment. We have served consumers and government in this country fairly. So either the government pays us or allows the payment of realistic prices for petroleum products,” Mr Hosi added.

Full-cost recovery, he said, was the only means by which the government could settle its debts and ensure regular supply of petroleum products.

Drop in fuel prices

The price of Brent Crude oil as of December 18, 2014 was $60.06 but the National Petroleum Authority (NPA) has indicated it is not in a position to reduce prices because it is indebted to the BDCs to the tune of some GHc237 million as of October 2014.

According to the Public Realtions Manager of the National Petroleum Authority (NPA), Mr Yaro Kasambata, petrol prices would only be slashed downwards if current prices were sustained for the government to recoup its remaining debt of GH¢237 million as of October 2014.

“In the interim, the NPA will continue to monitor prices on the world market and if the current downward trend continues, we will evaluate the situation and use part of any over-recoveries accrued to offset the current under-recovery bill (debts owed BDCs), as well as use part to do a downward adjustment in prices at the pumps to the benefit of consumers.

“This is also to ensure that supply of petroleum products to the market is not adversely interrupted in view of the upcoming festive season. The NPA will continue to ensure that there are no supply disruptions on the market,” the NPA said.