The stated-owned Bulk Oil Storage and Transportation Company Limited (BOST) has responded to the Institute of Energy Security (IES) over current marginal increases of levies in the petroleum sector.
IES recently called for the withdrawal of increased levies on some margins in the Price Build-UP (PUB) on petroleum products for BOST and others based on what has been described as “twisted” understanding of the issues in the industry.
In a statement, BOST said the explanation by IES regarding the increase in its Margin was a “sensationalized interpretation”.
According to IES, the increases in levies were based on amended margins including the BOST Margin, the Primary Distribution Margin (PDM), Fuel Marking Margin (FMM) and the Unified Petroleum Price Fund (UPPF) Margin.
However, BOST in the statement noted that the “civil society organization is simply asking for a withdrawal of the purported upward adjustments in the margins”, without paying due regard to the realities involved.
IES interpretation
IES had indicated that a UPPF Margin of 3 pesewas per litre had been added to all liquid products except for Premix fuel, MGO Foreign, Gasoil Mines, Gasoil Rig, plus the addition of 3 pesewas per kilograms on LPG.
It stated that the Primary Distribution Margin was also increased to 3 pesewas per litre of Petrol, Diesel, and Kerosene.
Similarly, the Fuel Marking Scheme has seen an increment of up to 167% from 3 pesewas per litre to 8 pesewas per litre for all liquid products.
It also said the BOST Margin has recorded an increment of 100% from 6 pesewas to 12 pesewas per litre.
However, in its response, BOST clarified the issues as follows:
“On the BOST Margin, it was introduced purposely for the operation and maintenance of the petroleum storage and distribution infrastructure. Given the huge investments made in building these over the years, failure on the parts of successive governments to review the margin from 2011 resulted in massive dilapidation and in some instances, decommissioning of some of these strategic assets.
“The upward adjustment received was a decision in time to stem the tide of dilapidation and bring these assets back to life and into use. The twisted interpretation is therefore unfortunate and should be disregarded with the full force of every meaningful appreciation of the need to keep stocks of petroleum products for the nation.
“The Primary Distribution Margin (PDM), the tax in the petroleum price build-up which is utilized in the distribution of petroleum products across depots in the country is targeted at ensuring uniformity in petroleum product prices across the nation.
“It was under the management of BOST until 2012 when the responsibility was transferred to the National Petroleum Authority (NPA).
“The categorical statement that BOST is still managing this margin is simply false and should be disregarded.
On the GHS3 pesewas upward adjustment in the BOST margin, our initial request was GH9 pesewas to restore the value to the 2011 dollar value. Despite our unsuccessful attempt, the GHS3 pesewas, has been efficiently utilized by the company.
“We at this point call on the public to have confidence in the current management and look forward to nothing but the best from the company”, BOST concluded in its statement.
Read the full statement by BOST below:
RE: GOVERNMENT MUST WITHDRAW THE INCREASED MARGINS ON PETROLEUM PRODUCTS
The Bulk Oil Storage and Transportation Company Limited, BOST has taken notice of a release from the stables of the Institute for Energy Security, IES, a respected CSO in the energy sector regarding the review of petroleum margins by the government of Ghana through the regulator of the petroleum downstream, National Petroleum Authority (NPA).
The Civil Society Organisation is simply asking for a withdrawal of the purported upward adjustments in the margins.
Of particular concern to us are:
● The sensationalized interpretation of the increase in the BOST Margin
● The claim that BOST is the custodian and manager of the Primary Distribution Margin, PDM and
● The conclusion that the GH3 Pesewas upward adjustment of the BOST Margin eleven
months ago has not been properly justified by BOST and that the company continues to
under perform despite the intervention.
We wish to respond to these claims as follows:
On the BOST Margin, it was introduced purposely for the operation and maintenance of the petroleum storage and distribution infrastructure. Given the huge investments made in building these over the years, failure on the parts of successive governments to review the margin from 2011 resulted in massive dilapidation and in some instances, decommissioning of some of these
Strategic assets.
The upward adjustment received was a decision in time to stem the tide of dilapidation and bring these assets back to life and into use.
The twisted interpretation is therefore unfortunate and should be disregarded with the full force of every meaningful appreciation of the need to keep strategic stocks of petroleum products for the nation.
The Primary Distribution Margin, PDM, the tax in
the petroleum price build-up which is utilized in the distribution of petroleum products across depots in the country is targeted at ensuring
uniformity in petroleum product prices across the nation. It was under the management of BOST until 2012 when the responsibility was transferred to the National Petroleum Authority, (NPA).
The categorical statement that BOST is still managing this margin is simply false and should be disregarded.
On the GH3 pesewas upward adjustment in the BOST margin, our initial request was GH9 pesewas to restore the value to the 2011 dollar value.
Despite our unsuccessful attempt, the increment of GH3 pesewas, has been efficiently utilized by the
company.
In January 2017, the state of the company was
as follows:
● A debt of $623 million to suppliers and related parties
● $36 million claim by Bulk Distribution Companies, BDCs for products lost in the BOST system.
● Decommissioned petroleum barges
● Non-operational Tema-Akosombo-Petroleum-Product-Pipeline, TAPP since2015
● Non-operational Buipe-Bolgatanga-Petroleum-Product-Pipeline, B2P3
● Non-functional Bolgatanga and Maame Water Depots since 2015
● Old fashioned pumps and meters across the depots
● GHS237 million debt owed to a number of domestic banks including Ghana Commercial Bank, Fidelity Bank, UBA, UMB among others.
● Fifteen (15) tanks decommissioned out of Fifty-One (51) tanks of the company.
As we speak, thanks to the upward adjustment, continuous government support and the efficient management of BOST as an entity, the company now boasts of:
● A functional Bolgatanga depot exporting products to the landlocked countries of the Sahel region
● Successful repair of nine (9) out of Fifteen (15) decommissioned tanks
● Payment of debts to suppliers and related parties down to $50 million
● Successful vetting of BDC lost product claims of $36 million down to $14.8 million
● Fully repaired Buipe Bolgatanga Petroleum Product Pipeline
● Full repaired Tema Akosombo Petroleum
Product Pipeline
● 90% completed Bulk Road Vehicle Truck Park at Bolgatanga
● Outright settlement of debts owed domestic banks
● Successful repair of all petroleum barges
● Return to shipping 3.3 million liters of products per trip of the barges from Akosombo to Buipe which is the equivalent of 62 trucks loading an average of 54,000 liters per truck
● Cutting down the operational expenses of BOST per year from a humongous GHS453 million
in 2016 to GHS190 million in 2019 among
others.
We wish to state categorically that, BOST, the strategic petroleum storage and distribution company of Ghana has never been better managed.
We at this point call on general public to have confidence in the current management and look forward to nothing but the best from the company.
Our doors are open to share information on our operations and the progress story so far.
We look forward to executing our mandate to the government good people of Ghana.
God bless our homeland Ghana.
