Stakeholders in the Bulk Oil Distribution Industry have appealed to government to halt the influx of illegal crude into the country to help maintain the quality of the commodity.
According to them, the worsening BDC premium situation is significantly driven by the continuous influx of illegal products which render the legal trade uncompetitive, hence the need to lower premiums below economic levels.
Outlining the effects of such actions on the industry, the Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors, Senyo Hosi maintained that government must take pragmatic steps to halt the canker.
“In the event that government takes very strong actions to address the influx of illegal trade, BDC premiums may be restored to minimal economic level,” he said.
He explained that the BDC premium which refers to the importers total supply chain cost structure, including the gross margin is always affected due to the growing trends of the illegal trade of crude.
“The components of the premium include the freight cost, marine insurance cost, demurrage, hedge cost for both price and Forex risk storage fees, mooring/port fees, booster pump fees, inplant losses, dyeing cost, financing fees, among others,” he explained.
Giving some figures, Mr. Hosi stated that the average BDC premium for the trimester decreased from $77.49/mt and $81.98/mt for PMS and AGO in 2016 to $66.2/mt and $65.7/mt respectively.
“This represents a 14.57% and 19.86% drop from the 2016 position. It also marked a 40.96% and 41.47% drop compared to indicative NPA premiums of $112.17/mt for PMS and AGO respectively,” he said.
“The premiums for both products reached its highest in the first half of April ($112/mt and $101.8/mt for PMS and AGO respectively). The premiums in this period were still lower by 0.13% and 9.28% for PMS and AGO when compared to the indicative BDC premiums of the NPA,” he added.
Mr. Hosi was of the view that the comparative lower premiums raise concerns over the commercial viability of the BDC trade.
He maintained that the worsening BDC premium situation is significantly driven by the continuous influx of illegal products which render the legal trade uncompetitive, hence the need to lower premiums below economic levels.