The Chamber of Bulk Oil Distributors, CBOD has recommended a way-forward to help find lasting solutions to the periodic loses and managerial shortfalls at the Bulk Oil Storage and Transportation, BOST.
According to CBOD’s 2018 Industry report of Ghana’s downstream petroleum, it was established that the overall debt position of BOST was about USD423mn (net of recoverable receivables) as at November 2017.
This includes trading losses of about USD138mn from BOST’s trading activities in 2015 and 2016 despite benefiting from Government’s subsidies through the price stabilization and recovery levy as well as preferential forex rates granted BOST by the Bank of Ghana.
Portions of the reported reads; ” the recommendations for addressing the financial challenges of oil storage company include the ringfencing of about USD129mn of the debt by the Ministry of Finance and a bailout refinancing of USD210mn from GNPC (USD160mn) and the NPA (USD50mn).
Of this, GNPC has released USD100mn while the NPA has released USD20mn. It is unclear how and when BOST will repay GNPC and the NPA.
It must be noted that BOST accrues about GHS120mn per annum from the BOST margin (a mandatory charge on regular PMS and AGO sales by all OMCs) for no services rendered.”
RECOMMENDATIONS TO CURB BOST LOSSES
However, in recommending a lasting solution to the ‘periodic’ BOST losses, CBOD said, The BOST inter-depot transportation function has over the years been a contributing reason for losses experienced by the organization.
Ghana is currently over-trucked significantly because of the hope of BOST patronage. Ghana’s transportation pricing is based on an eight (8) trips a month assumption for local deliveries (deliveries within a 66km radius). For such a radius, a truck should be operated at about 20 trips minimum a month.
This implies that Ghana’s asset utilisation premium in the transportation price build-up is overstated by 150%.
In relation to the above; CBOD recommends the following;
- That BOST openly auctions the inter-depot transportation of fuel. This will imply that all licensed transporters will have an objective chance at competing. It will also ensure the retention of all ‘would have been economic rents’ within BOST to fund its operations.
- The auctions be made based on volume and location with the NPA transportation price as the benchmark. Such auctions must
require the posting of easily negotiable performance insurances or financial instruments.
- Price quotes must be NPA benchmark transportation prices less a management margin for BOST. This implies that NPA benchmarks shall be paid to BOST for their service and the margin retained by BOST to fund their administrative and operational costs for managing the transportation processes.
The above recommendations will ensure Ghana is not short-changed and value is retained in BOST. It will dispel the rent seeking and help truncate the excessive politicization and polarization of BOST. As the industry grows, it is imperative that institutions are depoliticized and the citizenry’ access to service and opportunities be not dependent on political discretions.