There is very little chance of petroleum legacy debts – a phenomenon which almost crippled the downstream sector – occurring again, as robust structures are now in place, Chief Executive Officer of the Chamber of Bulk Oil Distributors (CBOD), Senyo Hosi, has said.
Government, between 2011 and 2015, owed Bulk Oil Distribution Companies to the tune of US$1billion which was fully paid-off just January this year. However, Mr. Hosi is confident that such a situation is never likely to occur again.
“To the extent that policy still stands per what we worked with government on, we shouldn’t have any legacy debts from the petroleum side occurring again,” he told the B&FT in Accra.
“To deal with it, the first thing we did was to eliminate the occurrence of legacy debts; and that was worked on with government between 2014 and 2015 to establish the deregulation of petroleum prices for the major products. There are a few products that are still regulated, and for those ones you must have a budgeting mechanism which is within reasonable sums.
“So, we do not expect it [legacy debts] to reoccur; it is not like the power sector where these weren’t done and we continue to have the same problems,” he said.
For him, things are now being done in a more structured fashion with a clear focus on curing the problem forever, and that is what gives him confidence that the problem will not occur again.
“I want to believe that the structures we have in place are curing the problem, and it is not supposed to happen again unless policy changes.”
Although other debts from state agencies like BOST and the Tema Oil Refinery (TOR) still remain, those are not legacy debts but organisational inefficiencies, he said, and therefore have nothing to do with the recent payment made by government to BDCs.
The US$1billion that was paid on January 13, 2020 represents the final payments to BDCs. It includes interests accrued on the debt, through bonds issued by the Energy Sector Levies Act (ESLA) to the Legacy Bonds Limited – a special purpose vehicle jointly owned by the CBOD and Ghana Association of Bankers (GAB).
A press statement from CBOD issued Monday, February 10, 2020 said the amount received is now due for redistribution to beneficiary banks and petroleum service providers.
The payment was made after several years of back-and-forth between the CBOD and government over the payment schedule.