Business News of Wednesday, 8 June 2016
Source: citifmonline.com
Petrol pump
A $1.1 billion drop in the petroleum products import bill in 2015 is a clear manifestation that the high prices Ghanaians are paying for petroleum products is not justified.
Ghana imported over 3.7 million (3,708,904.815) metric tonnes of petroleum products at a cost of over $1.9 billion in 2014, compared to 3,678,049.650 metric tonnes at a cost of $3 billion ($3,045,579,675.59) in 2015.
This means that even though the country imported 30,855.l65 metric tonnes more in 2015 than in 2014, the import bill dropped by over $1.1 billion ($1.140,774,743.01) due to the drastic fall in the price of crude oil on the world market.
Data from the National Petroleum Authority (NPA) revealed that Bulk Oil Distribution Companies (BDCs) accounted for 74% of the imports while government institutions imported the remaining 26%. What this means is that BDCS have injected 74% of the $1.9 billion into the Ghanaian economy.
According to the data, the $1.9 billion ($1,904,804,932.58) did not include the cost of importing 259,205,326 metric tonnes of crude oil. Bulk Oil Storage and Transportation (BOST) and Oil Trading Companies (OTC) brought in the remaining 26% of petroleum products.
Breakdown of 2015 fuel imports
The breakdown of the various products imported is: Crude 259,205.326 metric tonnes; Diesel 1,881,350,944 metric tonnes; Petrol 1,258,761,838 metric tonnes; Liquefied Petroleum Products (LPG), ‘ 197,705.957 metric tonnes; and Aviation Turbine Kerosene (ATK) ‘ 111,880.751 metric tonnes.
The money spent on importing each petroleum product, including other related charges at the port, are Diesel $1.1 billion ($1,132,852,719.06); Petrol $857 million ($857,237,728.72); LPG $104 million ($104,647,575.48); and ATK $72 million ($72,170,769.21).
The NPA did not provide how much it cost to import 259,205.326 metric tonnes of crude last year. Import of petroleum products is expected to spike this year following a fault on Floating Storage and Offloading vessel (FPSO) Kwame Nkrumah, forcing Tullow to cut production by 50 percent.
As a result, there will also be the need to increase import of crude oil to make up for the 50 percent drop in gas from Atuabo processing plant to fire thermal power plants to avoid rolling power cuts as well as increase the importation of Liquefied Petroleum Gas (LPG).
With the resumption of operations by Tema Oil Refinery (TOR), some Ghanaians have attempted to downplay the importance of BDCs in sustainable supply of petroleum products.
However, with NPA figures indicating that 74 percent of all petroleum products consumed in the country were imported by BDCs, anything that hinders their operations would result in an acute shortage of petroleum products.
An amount of $800,000 that Kingsley Awuah-Darko classified as profit recently is rather fees TOR charged for processing one million barrels of crude oil belonging to Bulk Oil Storage and Transport Company Limited (BOST) under a tolling arrangement.
TOR only refines crude oil owned by BOST for a fee and finished products are handed over to BOST to sell and make a profit.
Considering the financing and huge overhead costs, TOR cannot be said to be making a profit when it can only process 28,000 barrels of crude oil per day out of the installed capacity of 45,000 barrels of crude oil per day due to a broken down furnace.
While commending BOST and TOR for the collaboration that has revived a national asset, who pays for trading risks, should any occur, remains the big question on the lips of many industry players.
The BDC concept was mooted sometime in 2007 by the National Petroleum Authority (NPA) and some key stakeholders to enable private Ghanaian investors who had the capacity to import finished petroleum products to augment the production of TOR.
Private Ghanaian investors supported the idea and have since invested heavily in the national cause. Indeed, when the refinery was in distress and could not produce, these private BDCs came in handy to keep the Ghanaian economy going by ensuring petroleum products were available.
Apart from supporting the national economy with products, these private investors provided employment for hundreds of Ghanaian who hitherto would have been on the streets.
Under the then price-regulated market, these investors piled up debts in the form of price under-recovery and foreign exchange losses, running into millions of dollars, with the hope that the government will pay the debts incurred in their bid to support the economy and also keep their businesses running.