The credit lines of most oil marketing companies (OMCs) have been cut as a result of a GH¢1billion debt they owe bulk oil distribution companies (BDCs).
The OMCs were in the past given a 30-day grace period to sell and pay for the petroleum products they lifted from the storage depots of the BDCs, but majority of the OMCs have, in the past, abused the credit line by not paying back on time.
Therefore, the Chamber of Bulk Oil Distributors (CBOD) has, with effect from September 2014, decided to implement a “cash-and-carry” system to save its members from plunging further into liquidity crisis.
At present, the government owes the BDCs GH¢1.3 billion.
An audit is being carried out into the debt.
Explaining the rationale for the CBOD decision to the Daily Graphic, its Chief Executive Officer, Mr Senyo Hosi, said only a few credit-worthy OMCs existed and intimated that on a larger scale “it is cash and carry”.
We are restructuring
“We are restructuring our business model in ways that will improve needed liquidity to sustain supplies to the market and ultimately enable us to serve consumers as required of us,” he pointed out.
He explained that the current liquidity challenge facing the BDCs was as a result of a general indebtedness to them by the OMCs and the government.
The BDCs are faced with liquidity problems because seven out of 10 banks have pulled out from pre-financing their activities as a result of their indebtedness to those banks.
Another challenge confronting the BDCs is the depreciation of the cedi and the high demand for foreign exchange to import finished petroleum products.
Highlighting the measures being instituted by the CBOD to resolve the numerous financial challenges facing its members, Mr Hosi said his outfit had decided to cut back on credit for non-paying OMCs, reduce credit duration for some, as well as implement the cash-and-carry policy in full.
“This has become necessary because if not checked, they will compound the liquidity crisis the industry faces and in turn negatively affect the ability of the BDCs to sustain supplies to the consumer,” he intimated.
Touching on the effects the liquidity challenges would have on the financial sector, he said, “The inherent risk associated with any form of irresponsible credit behaviour has a direct impact on the financial sector and the economy as a whole in ways that may be irreparable.
“This is a $3-billion industry and so you can imagine the effects any negative impact will have on consumers and the banking industry as a whole.”
Meanwhile, there are reports of pockets of petroleum products shortage in some parts of Accra, reports Seth Bokpe.
A number of Goil fuel stations in Accra have run out of petrol, compelling attendants to turn away customers in need of fuel.
At the Goil Fuel Station near the La General Hospital, an attendant told the Daily Graphic that the station had run out of petrol since Tuesday.
There was, however, a delivery truck discharging diesel at the station.
At the Kpeshie Lagoon Goil Fuel Station near the Labadi Beach Hotel, the fuel attendants said the station had been out of petrol since the morning but added that it was expecting some fuel later in the day.
At the Goil station close to the Alajo Junction, the manager declined to comment, but the attendants had earlier said they did not have petrol.
The situation was not different at the Goil station at the Kwame Nkrumah Circle, where the attendants said the station had been without petrol for three days.
They could not tell when the station would receive its next consignment of fuel.
It was the same story at the Goil station at Adabraka, near the Kojo Thompson Road, where the attendants said there had been no fuel since Tuesday.