Chamber of Bulk Oil Distributors criticises Government’s proposal to make BEST sole off-taker for Sentuo Oil Refinery
The Chamber of Bulk Oil Distributors (CBOD) has raised objections to the government’s plan to designate the Bulk Energy Storage and Transportation Company (BEST) as the exclusive off-taker for Sentuo Oil Refinery Limited’s production under the gold for oil programme (G40).
CBOD contends that this proposal contradicts the deregulation policy governing the petroleum downstream sector, expressing concerns that it aims to indirectly control the exchange rate by channeling Sentuo Oil Refinery’s cedi liquidity through BEST to manage USD allocations under the G40 programme.
In a plea directed at Dr. Alhaji Mahamadu Bawumia, the Vice President and Head of the Economic Management Team (EMT), CBOD urges a reconsideration of the proposal, asserting that achieving the necessary USD liquidity for the G40 programme can be accomplished without tying Sentuo Oil Refinery’s entire output to BEST.
“We are convinced that this plan is inconsistent with the deregulation policy that guides the 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 Limited (SORL) with BEST, formerly known as Bulk Oil Storage and Transportation Company (BOST),” argued the CBOD in a statement issued on Thursday, April 25, 2024.
The Chamber in the statement vehemently opposes the policy proposal, highlighting potential market challenges and deficiencies that could detrimentally affect the downstream sector in the medium to long-term.
Moreover, CBOD asserts that the proposal undermines government efforts to foster private sector involvement and contravenes the successful petroleum deregulation policy. By sidelining Bulk Oil Import, Distribution and Export Companies (BIDECs), the government risks stifling competition and impeding the growth of a robust private sector within the industry.
CBOD further warns of the risk of creating a monopolistic market controlled by a single entity, which could negatively impact both the downstream sector and the fuel-consuming public. The Chamber emphasizes the need for a framework that promotes active participation from all stakeholders, including BEST, BIDECs, and private entities across the downstream value chain.
“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 Chamber noted.
Highlighting the significant contributions of the BIDEC subsector to national development, including ensuring energy sufficiency during supply shortages and investing in storage infrastructure, CBOD urges policymakers to reconsider their stance and adopt a collaborative approach that leverages the strengths of all entities.
CEO of CBOD, Dr. Patrick Ofori, in the statement, reiterated the Chamber’s commitment to collaborating with the government to develop a G40 framework that fosters fair market practices, transparency, innovation, sustainability, and efficiency within Ghana’s downstream petroleum sector.
“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,” he quipped.
