BoG’s $200m to BDCs to import petroleum products inadequate – Energy Strategist

Energy Management Strategist, Dr Yussif Sulemana, has described as inadequate the $200 million that the Bank of Ghana (BoG) is selling to the Bulk Oil Distribution Companies (BDCs) to import finished petroleum products into the country.

According to him, the BDCs need about $400 million to bring the finished fuel on a monthly basis.

Speaking in an interview, Dr Sulemana, however, said the government may have a strategy in place to import petroleum products, based on the ‘gold-to-oil’ batter arrangement.

“If you segregate the amount from this kind of ‘gold to petroleum’ product deal, the amount is woefully inadequate. We need over $400 million monthly to import petroleum products. So to give $200 million within the first quarter [2023], it will create a lot of gaps…I mean huge gape”.

“However, as I said, we cannot sound alarmed at this moment in time. I want to believe that because of the ‘gold-to-oil’ deal or because of the petroleum products-to-gold exchange being championed by the Bank of Ghana and other allied agencies within the downstream sector if that is able to cover the deficit [petroleum imports] then they shouldn’t be any cause for concern”, he added.

Continuing, Dr Sulemana said the only cause for concern should be the unavailability of forex, adding, it is critical in stabilising prices at the pumps, coupled with the other factors.

“If you look at it, what actually caused the stability of the pricing at the pumps is just because of the availability of forex and nothing else, it has nothing to do with anything else. So, if we do not have availability of forex (dollars) then they will be pressured.”

“But it is early days yet. We have to wait, this month is a crucial month for the downstream [petroleum sector] because this is the first time we are going for this kind of deal [gold-to-oil]. If the deal succeeds then there is no cause to worry that much”.

The Bank of Ghana on Friday, June 6, 2022, said it will sell a total of $200 million to the BDCs in the first quarter of 2023 in a Forex Forward Auction.

This was $220 million lower than the amount it sold in the final quarter of 2022. The Central Bank sold a total of $420 million to the BDCs via banks in quarter 4 of 2022.