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Local suppliers in petroleum upstream sector cry over high cost of credit

  • SOURCE: Citi | Citi FM
  • Local suppliers in the Petroleum Upstream sector are asking commercial banks to review downwards the cost of credit. The companies complain most of the banks charge relatively higher rates on loan packages which affect their returns.

    The local suppliers in the Petroleum Upstream sector are businesses that provide various services to major oil companies that are engaged in oil exploration and drilling. Some provide equipment and skills whereas others provide food, uniforms among other services.

    The suppliers numbering about 270 companies, expressed their concerns about their inability to access credit in the various commercial banks citing high-interest rates and too many charges. Some of the operators who spoke to Citi Business News at an engagement between them and seven commercial banks which was facilitated by Tullow Ghana said the situation is discouraging local participation in the Petroleum Upstream sector.

    “They should tone down on collateral and some of their fees are frivolous. Some of them charge transactions fees, facilitation fee, processing fee and monitoring fee. A bank is introducing monitoring fee when they can’t even go offshore to monitor the work that the supplier is doing,” Robert Batong Hor, CEO of Noblefield Oil Services, one of the suppliers told Citi Business News.

    “The capital is huge, the kind of money that you require to undertake projects is huge. The easiest way to fund is to go to the Microfinance Institution but their interest is 6% per month, which is very high. Charles Ebo Manson another supplier said.

    The Bank of Ghana has instituted various measures to reduce interest rates further, however, the companies say that is yet to have any impact on their operations.

    As part of efforts to reverse the trend, Tullow Oil has provided a platform to connect lenders to these local suppliers. The Director for External Affairs, Social Performance and Local Content at Tullow Oil, Cynthia Lumor believes the meeting will yield some positive results.

    The seven banks that were present at the meeting included GCB Bank, Cal Bank, Stanbic Bank, Standard Chartered Bank, Barclays Bank and Fidelity Bank. The banks took turns to present their various packages that would be of interest to the supplying companies.

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    Citi FM

    Citi 97.3 FM is an English-speaking radio station that operates from Adabraka in Accra, the capital of Ghana. We can be heard on 97.3 megahertz and on www.citifmonline.com
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