The Government of Ghana (GoG) has settled debts in excess of Ghs 4 billion owed Bulk Oil Distribution Companies (BDCs) in the country.
A perusal of the Ghana Chamber of Bulk Oil Distributors (CBOD) 2019 Ghana Petroleum Industry Report by norvanreports, reveal that the last payment of the 8-year legacy debt by government was on January 13, 2020 with a 12-year ESLA Bond equivalent to Ghs 418 million.
Government according to the report, begun payments on October 1, 2012.
GoG’s indebtedness to BDCs comprise Forex Loss Under Recoveries (FLUR), Price Under Recoveries (PUR), Real Value Factor (RVF) and FLUR interest (FLURI).
FLUR is the foreign exchange losses arising from the NPA’s application of exchange rates below market during the periods of price regulation. PUR is the price subsidy granted by government through the NPA’s regulated prices.
On the other hand, RVF refers to the financial cost (interest) incurred by BDCs for the delayed payments of price under-recoveries whilst FLUR Interest, refers to the financial cost borne by BDCs for the delayed payment of Forex Loss Under Recovery by government.
“At the end of 2019, all principal and interest claim (RVF and FLURI) by BDCs had been validated with principal claims fully paid and a part of the validated interest paid off by government. This resulted in an outstanding BDC legacy debt of Ghs 418.97mn (USD75.60mn) receivable from government. This was fully settled by government on 13th January 2020 with 12-year ESLA Bonds,” stated the report.
Meanwhile, the National Petroleum Authority (NPA) in 2019 revoked the license of five (5) Bulk Oil Distribution Companies (BDCs) in the country, bringing the total number of BDCs to 30 from the previous number of 41 BDCs in 2016.
The 5 BDCs whose license were revoked according to the Ghana Chamber of Bulk Oil Distributors (CBOD) include: L.I.B. Ghana Ltd., Imperial Energy Ltd, Mimshach Energy Ltd., Richelle Energy Ltd. and WI Energy Ltd.
The revocation of the license CBOD explained, was due to the inability of the BDCs to pay their annual license fee of $400,000.00.
“The revocation of the licenses was as a result of the companies’ failure to fully satisfy their financial obligations (license fees) to the NPA,” said CBOD.
“The annual BDC license fees of $400,000 has, however, been revised downwards to $300,000 in 2020 following negotations by the Chamber. The downward revision of the license fee is expected to provide some financial relief to BDCs and shore up their liquidity positions for their operations,” added CBOD.