Dr Raziel Obeng-Okon, an investment analyst, has said the system under which Oil Marketing Companies (OMCs) operate with a fixed or regulated price build-up of their products is a threat to their survival.
He was reacting to an announcement by Bulk Distribution Companies (BDCs) to roll out a credit rating system that would determine the credit-worthiness of OMCs.
Under the system OMCs will be rated, based on their credit history, into four categories and these are tier-one, tier-two, tier-three and tier-four. Tier-one is the best rating while tier-four represents the worst rating.
Tier-one and tier- two categories will receive products on credit while tier-three and tier-four would be compelled to purchase the products on cash-and-carry basis.
Dr Obeng-Okon who is the Chief Executive of CIDAN Investment, told the GNA in an interview that imports by the BDCs could not be sold on cash and carry basis because the OMCs could not afford the amounts involved.
“The BDCs cannot survive without certain regulated credits to the OMCs. Right now, some OMCs have increased their exposure with banking facilities in this high interest regime and this is hurting the business significantly by escalating the already high cost of operations,” he said.
Meanwhile, the Association of Oil Marketing Companies (AOMCs) has reiterated its call on the BDC to respect the supply agreement entered with individual OMCs.
Mr. Kwaku Agyemang-Duah, AOMC Chief Executive Officer, has also rejected the claim by BDCs that OMCs were the main cause of fuel shortage in the country.
“It is pertinent that all relevant petroleum service providers and/or stakeholders put their shoulders to the wheel and redeem the industry to ensure reliable, sustainable and predictable supply of fuel to all and sundry,” he told the GNA.
He expressed concern that the BDCs kept on shifting the goal post blaming everybody – “from government, to banks and now to the OMCs, leaving themselves”.
Mr. Agyemang-Duah, who is also the AOMCs Industry Coordinator, said OMCs/LPGMs contributed over Gc800 million annually to the nation’s coffers in respect of the excise, road levy and Tema Oil Refinery (TOR) debt levy without PAYE taxes, by lifting petroleum products from the depot and distributing nationwide.
He said the industry also offered direct and indirect employment to over 30,000 people, albeit with the controlled, regulated and small margins.
Mr.Agyemang-Duah said the recent paucity of fuel supply had negatively impacted on the volume of products sold, hence the related outturns for OMCs to even survive to retain employees on payroll.
He said he was optimistic that the measures being put in place by the stakeholders would provide for reliable supply of products.
On the issue of OMCs/LPGMs being asked to have “Bank guarantee” prior to lifting products by BDCs, he said the regulator should not be involved or drawn into commercial issues involving petroleum service providers in the spirit of deregulation but rather should constantly play its roles of ensuring a level playing field.
