Some Oil Marketing Companies (OMCs) and Bulk Distribution Companies (BDCs) have reportedly withdrawn from the Government’s Gold for Oil programme. While the specific reasons for their exit are currently unknown, it is believed that implementation challenges associated with the programme are the likely causes for their departure.
The OMCs and BDCs that have decided to pull out from the programme are expected to make their exit public in the coming days, shedding more light on their motivations for leaving.
Since the inception of the Gold for Oil programme, a substantial volume of 455,000 metric tonnes of fuel has been imported into the country by the Government.
Launched in January 2023, the gold for oil programme was designed to leverage the country’s gold reserves to facilitate fuel imports. The first consignment of fuel, totaling 40,000 metric tonnes and valued at $40 million, marked the initial step in this ambitious endeavour. The programme aimed to not only secure a steady supply of fuel but also potentially influence pump prices, thereby providing relief to consumers.
Meanwhile, Patrick Ofori, CEO of the Chamber of Bulk Oil Distributors (CBOD), has been vocal about advocating for a level playing field for BDCs in the industry. He has expressed concerns about preferential treatment given to the Bulk Oil Storage and Transportation (BOST) company, which could create an unfair advantage over other bulk distribution companies participating in the Gold for Oil programme.
Dr. Ofori has emphasized the importance of creating an enabling environment that promotes fair competition based on individual companies’ strengths. He has raised concerns about the scheduling of petroleum-carrying vessels at the ports, known as laycans, which appear to favor BOST. He has also highlighted the allocation of foreign exchange, warning that it could distort the markets and further strain the already burdened economy.
According to Dr. Ofori, it is crucial for BOST to compete within the commercial space of product importation based on the strength of its balance sheet. He has urged BOST to secure letters of credit and attract international oil trading companies based on their own merit, rather than relying on state entities for protection and claiming efficiency based on state support.
The CEO of CBOD has also cautioned against the central bank underwriting the risks associated with BOST’s commercial activities. He has referenced past experiences involving the Ghana National Petroleum Corporation (GNPC) supporting BOST, which did not yield positive outcomes. Dr. Ofori has also expressed concerns about product accountability and transmission losses associated with BOST facilities, as reported by some bulk distribution companies and inspection firms.
These developments raise important questions about the structure and functioning of the Gold for Oil program and the need for a fair and transparent framework that fosters healthy competition and accountability within the oil and gas sector.