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BDCs Support TOR’s Operations to Comingle

  • SOURCE: Goldstreet Business | Editor
  • Tema Oil Refinery (TOR), after series of maintenance procedures is expected to come on-stream with 1500ppm diesel against the 50ppm (Parts Per Million) being imported by the Bulk Distributing Companies (BDCs).

    Checks at the National Petroleum Authority, NPA, reveals that some BDCs are currently supplying low sulphur diesel while others are supplying 10ppm and 9.5ppm ultra-low-sulphur-diesel as pertains in Europe. TOR’s specifications, by law, falls short of the required 50ppm standards set by the NPA in August 2017, however its decision to enter the market was an agenda strongly backed by the BDCs.

    The BDCs are reported to have proposed the adoption of a policy to allow the comingling of local refinery products and imports for sale in the local market. This will mean the 50ppm low sulphur products from the BDCs will be mixed at the pumps with the high sulphur (1500ppm) products of TOR.

    They have also advocated that the oil marketing companies, OMCs, be banned from using the imported 50ppm standard as a branding tool to make TOR products unattractive.

    This move comes to many as a surprise as it was thought that BDCs will prefer having TOR’s products barred from the market. The move by the BDCs has been welcomed by many who have been thinking of what to do with TOR’s products which obviously do not match the low sulphur specifications.

    The BDCs also welcome the fact that TOR would compete for the same price on the market even though the sulphur content in the diesel is 30times higher than the current specifications. But instead of having the imported products differentiated from the local refinery products, the BDCs have consistently argued in support of the plan at its committee meetings that TOR should be allowed to operate on the market with their offspec product for a period of time.

    The local refinery once supplied the market with 45,000 barrels per day until 2015 when it was shut down due to accumulated debts. However, with several interventions by government, TOR will start refining about 25,000 barrels per day equivalent to about 30% of local daily demand.

    However, it is being speculated that diesel consumers will question why they should pay same amount for the same product with different specifications. The premium paid on 50ppm even though not dangerous to human health and safe for vehicles, it is much more expensive than the 1500ppm because of the extra cost in its refining.

    The argument for many Ghanaians would be the pricing mechanism and also the effect on the industry practice while others will fear this could possibly lead to some reduction in quality products in the comings days.

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