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BDCs accuse gov’t of subsidising GOIL …but the latter denies

  • SOURCE: | qwesa2big
  • senyoThe Chamber of Bulk Oil Distribution Companies (CBOD) has alleged, and Goil has denied, that government is subsidising state-owned oil companies to stay prices when there is supposed to be price hikes, so as to outcompete the private sector.

    Senyo Hosi, CEO of the chamber, told the B&FT that government has, through GOIL and the Bulk Oil Storage and Transportation Company Limited (BOST), stayed prices at the pump which leads to forcing other Oil Marketing Companies and BDCs to also stay prices.

    “I think the market would have to be a level playing field for all of us. Government has, a lot of the time, I think, cushioned its companies like BOST and GOIL with subsides which has resulted in GOIL, in particular, not increasing its prices at the pump when petroleum prices have gone up on the market.

    This is the price war we talk about, which is unfair, and forces other OMCs and BDCs, who don’t receive such subsides, to also drop their prices which affects them. I thought subsides have been scrapped,” he stated.

    GOIL denies allegations

    According to the Chief Operating Officer of GOIL, Alex Josiah Adzew, the accusations are flawed on a number of counts, including the fact that GOIL is a listed company and cannot be subsidized by government, which holds a little over 30 percent stake.

    “We have over 16,000 shareholders. So, this tag of being a state-owned enterprise should be discounted. We are operating as a fully commercial enterprise accountable to our board of directors who represent shareholders, including government,” he told the B&FT.

    Before deregulation of the downstream sector, he said, the National Petroleum Authority had a pricing structure for all OMCs as the premium per a metric tonne was capped, which meant that all the inefficiencies were factored into that margin.

    With deregulation, however, there is no capping for anybody, as all the OMCs have to negotiate their premium, be competitive and operate efficiently by applying their negotiation skills to come up with good deals by going to good sources that provide reasonable pricing.

    “And let me say that though all the OMCs hiked their prices in July 2015 when the deregulation started, we, as GOIL, did not and we were out there explaining to customers and the general public why we did not see the need to do so.”

    The move, he said, increased volumes sold by Goil’s service stations from about 48 million metric tonnes to 67 million metric tonnes per month.

    “That is what caused them [private OMCs] to reduce their prices in August last year because they saw the numbers go up for GOIL services stations across the country,” he said.

    “…and trust me, anytime that we have not been high profit minded the volumes has catered for the margin we lose and we don’t realise the margin slashed off.”

    He added that: “For us, we play a major role in serving customers as we currently have over 280 fuel services stations across Ghana, and this serves as leverage which helps us in negotiations with BDCs considering our volumes, numbers in outlets and market share as we control 28 to 30 percent of the market,” he noted.

    Mr. Adzew, therefore, challenged OMCs and the BDCs to make use of economies of scale, considering their strength to negotiate and have better deals from the BDCs or the oil traders, as that has been the strategy for GOIL, which some people are refusing to appreciate.

    GOIL, he said, has invested a lot in information and monitoring the pricing of the crude and refined crude on the world market, which gives it firsthand information on pricing on the international market and where it is heading, which it then factors into its own pricing formula.

    “As we sit here, we know that world market prices are likely to drop again by the next pricing window, and we have done our calculations as to by how much we will reduce the prices on the market, all things being equal.”


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