Accra, Ghana – April 25, 2024 – The Chamber of Bulk Oil Distributors’ (CBOD) attention has been drawn to Government’s plans to make the Bulk Energy Storage and Transportation Company (BEST), the sole off-taker of Sentuo Oil Refinery Limited’s production under the gold for oil programme (G40).
We are convinced that this plan is inconsistent with the deregulation policy that guidesthev activities of the petroleum downstream sector. We are informed that the plan has been necessitated by government’s aim to control the exchange rate by indirectly ceding Sentuo Oil Refinery’s cedi liquidity through BEST for the latter to manage USD allocations under the G40 programme. We object to this proposal and respectfully appeal to the Head of the Economic Management Team (EMT), The Vice President, Dr. Alhaji Mahamadu Bawumia, to review this proposal. Providing the needed USD liquidity under the G40 programme can still be achieved without necessarily anchoring the entire output of Sentuo Oil Refinery Limisted (SORL) with BEST, formerly known as Bulk Oil Storage and Transportation Company (BOST).
CBOD ardently opposes this proposal that would create market challenges and deficiencies, which will in the medium- to long-term, inevitably cripple the downstream sector.
This policy proposal not only contradicts government’s mantra of fostering private sector involvement in the industry, but also undermines the petroleum deregulation policy efforts, which are working perfectly. Further, by sidelining Bulk Oil Import, Distribution and Export Companies (BIDECs), the government risks stifling competition and hindering the growth of a vibrant private sector within this essential industry.
Additionally, the government risks creating a monopolistic market which will negatively impact the downstream sector and the fuel-consuming public at large. The G40 programme has nearly given 50% control of the market to BEST whereas Sentuo production accounts for 20% of the market needs. Having a single player control such a monumental share of the market will rob the market of the benefits of the efficiency, lower prices and growing local market expertise that the deregulation policy has occasioned.
The CBOD urges the government to reconsider this position and establish a framework that encourages active participation for all players – BEST, BIDECs, and all private participants within the downstream value chain. A collaborative approach that leverages the strengths of all entities would be far more beneficial and have an all-encompassing contribution to tne Inaustry ana tne Gnanalan economy.
Policy makers should recall the contribution of the BIDEC subsector towards national development. As a reminder, BIDECs provided the product needs of the country and made it energy suffcient during critical moments when Ghana’s peers in the sub-region experienced supply shortages. Other contributions include investment in storage infrastructure worth millions of dollars, provision of employment, contribution to GDP as well as contributing significantly to policy making.
The Chamber is committed to working with the government to develop a workable G40 framework that fosters fair market practices and transparency, while promoting innovation, sustainability and an efficient downstream petroleum sector in Ghana.
Patrick Kwaku Ofori, Ph.D. Chief Executive Officer
