Government owes the Bulk Oil Distribution Companies (BDCs) over GHC 3.4 billion in under recoveries as of June 18, 2015, the Ghana Chamber of Bulk Oil Distributors (CBOD) has said.
[contextly_sidebar id=”X4tgBzv8HEFtWDjPOq0Cuu3kLiabRNwp”]The under recoveries mostly came about due to the exchange rate, under recovery loss and price under recovery losses.
Speaking at a forum on the petroleum downstream sector, the Chief Executive Officer of the CBOD, Senyo Hosi insisted that, not only is the current regime of petroleum pricing unsustainable, it is also likely to cause another fuel shortage.
The National Petroleum Authority (NPA) has ceded its role in petroleum pricing to the BDCs but Mr Hosi argued that that depoliticizing petroleum pricing and the total liberalization of the pricing formula will only be an interim solution.
He believed that fixing the macro-economic situation will be a more permanent solution since the exchange rate is an important part of the pricing formula.
He stressed that the BDCs are “really suffering and the industry exposure to banks, stands at some $1 billion.”
A default risk, he said poses a systemic risk to the entire financial sector all -because of the BDCs failure to realize full sale proceeds due to the under recoveries poses a general risk default.
By: Raymond Acquah/citifmonline.com/Ghana