The cycle of shortage of petroleum products does not appear to end soon, as the remaining stock of premix fuel, which powers outboard motors used by canoe fishermen, is expected to run out by this weekend.
This follows liquidity challenges facing the company that supplies the product, which is highly subsidised, resulting in the accumulation of a huge debt for the government.
Cause of imminent shortage
According to an industry source, the imminent shortage had resulted from the refusal of the commercial banks to issue letters of credit (LCs) to pre-finance the importation of premix fuel and other petroleum products.
“The available stock is up to Friday and the effect the shortage will have on fishermen is obvious,” the source told the Daily Graphic in Accra yesterday.
According to it, the company responsible for lifting premix fuel would need GH¢40 million to shore itself up to lift the product, but the government had indicated that it was prepared to part with only GH¢10 million.
Government reaction
A Deputy Minister of Energy in charge of Petroleum, Mr Benjamin S.K. Dagadu, has, however, assured the public that a “substantial amount of money” will be released to the company that supplies premix fuel to the market.
While admitting that the ministry had knowledge of the concerns of the company, he said the government was committed to releasing money to ensure the regular supply of the product on the market.
Reacting to the issue in an interview with the Daily Graphic, Mr Dagadu admitted that the government was hugely indebted to the company because premix fuel was heavily subsidised.
“The government is making all efforts to release a substantial amount to the company to enable it to supply the needed stock on the market to avert any shortage,” he said.
He said by the close of work today “a substantial amount will be released to cushion the supplier”.
He, however, declined to state the exact amount to be released to bolster the bulk oil distribution companies (BDCs).
Diesel shortage
Touching on reports of a looming diesel shortage in some parts of the Northern Region, the deputy minister explained that the daily reports he had received on the availability of petroleum products indicated otherwise.
“Our stock level shows there is enough diesel stock,” Mr Dagadu noted.
Initial debt
The government is currently indebted to the BDCs to the tune of GH¢1.3 billion, being losses incurred due to the depreciation of the cedi against the dollar.
The products are usually purchased in dollars and consumers would have borne the cost of the price differentials if the government had not decided to absorb them.
Following the long queues recently recorded across the country as a result of fuel shortage, the government, on June 27, 2014, released GH¢450 million to settle part of its debts, while it engaged the international audit firm, Ernst and Young, to audit the claims submitted by the BDCs.
Audit stalls
Meanwhile, some of the banks that pre-finance oil imports are not co-operating with the audit firm.
The audit into the GH¢1.8 billion claims submitted by the BDCs stalled a week ago because the local banks that finance the BDCs were not co-operating.
The audit firm was contracted by the Ministry of Finance in the second week of June 2014 to audit the claims of the BDCs before payments will be made.
Ernst and Young was expected to submit its report by the end of July 2014 but it has asked for extension because it has not received the needed data from the banks to conduct the audit.
In an interview with the Daily Graphic, however, the Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors (CBOD), Mr Senyo Hosi, said, “Our members have largely co-operated with the audit firm. The banks are still not co-operating with the audit firm.”
He stressed the critical nature of information from the banks and, accordingly, expressed frustration at the failure of the banks to release the needed data for the smooth conduct of the audit.
“The attitude of the banks is worsening the liquidity crisis. They need to co-operate for the early completion of the audit. The completion of the audit will certainly pave the way for the release of funds from the government, which in turn will ensure uninterrupted supply of petroleum products onto the market,” Mr Hosi added.
