The Tema Oil Refinery (TOR), will today release 2,300 metric tonnes of premix fuel to mitigate imminent shortage of the product used by canoe fishermen for their outboard motors.
Twenty-five trucks loaded with premix fuel are expected to leave the TOR today (August 15, 2014) to service the coastal regions and Afram Plains, a Deputy Minister of Energy in charge of Petroleum, Mr Benjamin S.K. Dagadu, disclosed this to the Daily Graphic in Accra today.
The Deputy Minister was explaining the measures the government had put in place to avert shortage of the product, following the refusal of commercial banks to raise Letters of Credit (LCs) to pre-finance the importation of premix fuel as a result of debt.
The Bulk Oil Distribution Company (BDC), is indebted to the banks, while the government is also indebted to the company, thereby, making it impossible for it to raise funds to import products to meet the demands of fishermen.
An industry source told the Daily Graphic that the remaining stock of premix fuel was expected to run out by this weekend.
Premix fuel is highly subsidised, resulting in the accumulation of a huge debt for the government, which has declined to pass on the debt to the consumer.
According to the source, the company responsible for lifting premix fuel would need GH¢40 million to lift the product, but the government had indicated that it was prepared to part with only GH¢10 million.
Explaining the solution the government had put in place to resolve the issue, Mr Dagadu, said “the Tema Oil Refinery has agreed to supply 2,300 metric tonnes of premix fuel to mitigate any shortage.”
Meanwhile, he said, a meeting had been held to resolve the liquidity crisis facing the said BDC and explained that due to the huge figures involved, he, as a Deputy Minister did not have the mandate to issue cheques to cover such amounts.
He, therefore, said the Minister of Finance was expected to arrive from abroad over the weekend to approve the necessary payments next week.
While admitting that the ministry had knowledge of the concerns of the company,Mr Dagadu said the government was committed to releasing money to ensure the regular supply of the product on the market.
Mr Dagadu acknowledged that the government was hugely indebted to the company because premix fuel was heavily subsidised and gave the assurance that the government was making all efforts to release a substantial amount to the company to enable it to supply more premix fuel to the market.
He, however, declined to state the exact amount to be released to cushion the activity of the company.
Reacting to reports of diesel shortage in some parts of the North, Mr Dagadu said there was enough diesel stock, but said that the delays in the supply of the product to the northern part of Ghana was due to renovation works being carried out by the Bulk Oil Storage and Transportation Limited (BOST).
According to him BOST normally transports petroleum products to the northern parts of the country through the Volta Lake Transportation Limited (VLTL) to its depots at Buipe and then to the northern parts of Ghana.
However, because its depots are under rehabilitation, truckloads of petroleum products are transported by road which causes delays.
“That might have caused delays in the distribution of diesel to some parts of northern Ghana but products are being loaded as I speak and for that reason, the problems would be resolved before the weekend,” Mr Dagadu added.
The government is currently indebted to the BDCs to the tune of GH¢1.3 billion, being losses incurred due to the depreciation of the cedi against the dollar.
The products are usually purchased in dollars and consumers would have borne the cost of the price differentials if the government had not decided to absorb them.
Following the long queues recently recorded across the country as a result of fuel shortage, the government, on June 27, 2014, released GH¢450 million to settle part of its debts, while it engaged the international audit firm, Ernst and Young, to audit the claims submitted by the BDCs.
Meanwhile, some of the banks that pre-financed oil imports are not co-operating with the audit firm said the Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors (CBOD), Mr Senyo Hosi, has said.
The audit into the GH¢1.8 billion total claims submitted by the BDCs stalled last week because the local banks that financed the BDCs were not co-operating.
The audit firm was contracted by the Ministry of Finance in the second week of June 2014 to audit the claims of the BDCs before payments will be made.
Ernst and Young was expected to submit its report by the end of July 2014 but it has asked for extension because it has not received the needed data from the banks to conduct the audit.