Consumers cushioned by petroleum suppliers
Consumers lament high fuel prices
The Chief Executive Officer of the Chamber of Bulk Oil Distributors, Senyo Hosi, has noted that per the happenings in the country and prices on the international market, prices at the pumps should have been higher than they are currently.
According to him, players in the petroleum supply chain are cushioning consumers by selling at the current prices.
He noted, however, that this will have negative impacts on the Oil Marketing Companies in the long term.
“The truth of the matter is we are not paying realistic prices, you have a lot more people trying to speculate so sometimes as prices are supposed to be adjusted high, people are not or they will stock a lot more and hope that the next window they recover.”
In a JoyBusiness interview, Senyo stated that in the first half of this year, oil marketing companies have recorded significant losses due to the rates they are charging at the pumps.
“The truth is this particular half-year has ended with a lot of massive losses within the BDC and maybe within the OMC subsector. It is sometimes mind baffling when you see the rates that are actually on the pump."
“You look at the ex-ref prices, the taxes are not supposed to be added, I sometimes wonder how the oil marketing companies have been coping. And the BDCs if you look at what they have and you look at the market rate; you’d realize that there is going to be a challenge,” he said.
Meanwhile, Senyo Hosi explained some mechanisms these OMCs are employing to stay in business even though he noted that they are not sustainable measures.
“So, what some of them are doing now and why people are trying to convert closer to cash; when you get closer to cash, the fx risk or the depreciation provision you make in your exchange rate assumption will become less or close to zero."
“You can negotiate an exchange rate today and maybe get 8.25, you don’t need to use 8.5 as a forward rate, you’ll use 8.25. You’ll collect it now, but possibly you could take that and invest it over the next 30 days and it may compensate for some of the losses you’d have made.
“So, all kinds of models are being juggled by the players. But where I sit, these are not sustainable solutions, so we’d have to put structures that make the market reflect the price,” he said.
“There are two things that happen if the players fail, the entire supply chain will also fail, if the supply chain is failing, the IoT confidence in our market will also fail. So, the ultimate cost will be quite high as a country,” he added.
He further added that prices should be made more realistic to also cushion petroleum suppliers.
“So, we need to make sure our prices are a bit more realistic and there’s room for regulation. But it is difficult for regulators; when you’re seeing prices lower than they should be you’re happy because consumers will pay less, the only thing is that in the long run, the players who are supposed to sustain supply may have challenges doing it in the future.”
Consumers are lamenting the high cost of fuel as a litre of petrol is currently selling at GH¢10.99 at some pumps.
SSD/FNOQ
Senyo Hosi, Chief Executive Officer, Chamber of Bulk Oil Distributors