According to him, Ghana can only achieve the feat if politicians allow the private sector to take over the petroleum industry.
Mr. Hosi disclosed this to BUSINESS GUIDE in his office in an exclusive interview on the activities of the BDCs in the downstream sector, management of petroleum products in the country, government subsidies and other related matters.
Below is the full text of the interview:
Can you disclose your total storage capacity?
Our mandate really is to import fuel products, store and also to bulk sell products even when refined from the shores of Ghana to Oil Marketing Companies (OMCs). And we prosecute that mandate by ensuring that as much as possible we can cover everyday stock.
Sometimes the stock levels are high, sometimes they are low but as long as we cover every day, I think we are feeding the economy as we should.
The programmes that the BDCs have now adequately cover everything that we need (petroleum products). So everyday products will always be available and we are always developing new programmes for the future.
How much have you invested in infrastructure so far
BDCs’ total investments exceed over $450 million with over $350 million in infrastructure investments. As part of the objectives, BDCs are expected to invest in supply chain infrastructure to augment existing investments by government.
I am proud to say private BDC investments by BDC as of today in non-refinery storage outstrip existing Government of Ghana investments. Private storage capacity stands at over 366 million litres out of total non-refinery storage of 702 million litres. Additional investments are on-going to shore up domestic capacity.
What is the level of government’s indebtedness to BDCs
Government’s debts have always been going up due to the subsidies on petroleum products. And all of that has culminated into the current liquidity crisis and the dampening of funding confidence in the industry. The numbers put out by the media on how much government owes us is not wrong.
The liquidity problem we have is the function of government debt and also the OMCs. We have always been giving OMCs credit. So the debt that they owe is significant but it’s largely what we have been giving them.
Can you disclose the exact amount of money
On the price subsidy side, we have made a claim of $450 million but only $150 million has been paid by government. Currently, claims for Forex loss are also being audited. So until the auditing is completed, I will not be able to tell you the total debt owed by government.
The OMCs owe us GHc1 Billion but it is only a month credit.
Why do you always stop distributing petroleum products when government delays in payment of monies owed you. Is that the only way you can get government to pay the debt.
We don’t stop distributing fuel…what happens is that we lose the capacity to distribute fuel because we don’t have it. We are funded by the banks so the more we are indebted to them, the less we get funds. Will you continue to give money to someone who has not paid the initial debt?
What is your take on government subsidies
Government subsidies are well intended but I don’t think that they are best applied. The monies government has spent on subsidies for the last two years cumulatively is over $1.5billion.
The money can build a whole refinery that can convert Ghana into a net exporter of petroleum products to West Africa and help us earn more foreign exchange than we currently do.
The money can also revolutionize our entire transport system. So I think that we can spend money better as far as subsidies are concerned. There are ways to meet the needs of the people who need the subsidies.
When we subsidy, we encourage inefficiency and smuggling, so the net cost of subsidy is counterproductive. If you are looking at the masses and you want to support them, I think we should invest a lot more in mass transportation. Invest in mass transportation and you can subsidy it.
For example if we want to subsidize Metro Mass Transport, we will not be spending so much on block fuel subsidy. When you try to subsidize, you create a lot more physical cost and the same person you are claiming you are protecting will have to pay (tax).
What is your view about the politicization of the petroleum issues
Politicians need to avoid the fuel issues. Otherwise the more and more they get stuck in it, the more we get less productive with the spending of taxpayer’s money and that can negatively impact on the economy.
Politicians will always have a reason why they would want to think about petroleum because petrol has had a very strong play in Ghana politics in some time past.
Any suggestions on how we can solve the petroleum problem
Basically I think that we need to review the politics in petrol and we may have to do it gradually. We must think about how we can encourage people to use less fuel and mass transportation is key to reducing our fuel consumption. However, the fuel must be available and the public sector must be allowed to drive the sector.
We have over 127 OMCs and LPGMCs, and 24 BDCs which clearly indicates that the economy is ripe to drive competition but when government keeps regulating then there is only one thing that we open ourselves to which is more inefficiencies on the part of both government and petroleum service providers including BDCs.
What is the future of the BDCs?
We have a perfect opportunity to metamorphosize into exporters of petroleum products, and that will make us major players in the refinery industry.
Ghana is well-placed to become a net exporter of petroleum products to the West African region.
The BDCs’ success thus far is evidence of the Ghanaian entrepreneur’s ability to unleash the nation’s potential when given the chance and this must be encouraged.
Source: Daily Guide