Civil society organisations (CSOs) in the energy sector are warning that the country’s downstream petroleum industry will collapse unless urgent policy reforms are implemented.
The Centre for Environmental Management and Sustainable Energy (CEMSE) and Institute for Energy Policies and Research (ITEPR), in a statement, described the sector’s stability as fragile – citing high credit risks, poor debt management and weak regulatory enforcement.
Signed by CEMSE Executive Director Benjamin Nsiah and ITEPR Executive Director Kwadwo Poku, it outlined key challenges that have plagued the sector over many years. The CSOs acknowledged that the growing number of market participants has not translated into operational efficiency.
Since deregulation, the number of Bulk Distribution Companies (BDCs) has surged from 31 in 2015 to 53 in 2024 – a more than two-thirds increase. Similarly, Oil Marketing Companies (OMCs) have increased from 139 in 2015 to over 200 in 2024, with a peak growth rate of 19.79 percent in 2021.
The licence renewal fees for BDCs are about US$300,000 annually and a new entrant pays more than US$750,000. “Despite this expansion, average annual petroleum sales per OMC have remained stagnant, hovering around 24,990 metric tonnes in 2024 – nearly the same as in 2015,” the statement notes.
In fact, Ghana currently has more OMCs (213) than Kenya (106) and Tanzania (60), even though all three markets record annual sales of approximately 5 million tonnes of petroleum products.
Additionally, lax regulatory enforcement enables underreporting of sales volumes, tax evasion and the sale of substandard petroleum products.
For instance, in 2024 it was observed that some OMCs did not lift products from any of the depots yet had their indicative prices published by the NPA. These companies might be selling poor-quality products to petroleum users since the source of their products is unknown.
Indeed, politically connected companies exploit the system, obtaining OMC licences despite lacking physical stations. They divert petroleum products and evade taxes – depriving state agencies such as the Ghana Revenue Authority (GRA) and Bulk Oil Storage and Transportation Company (BOST) of critical revenue.
Consequently, the CSOs proposed introducing regulations that will improve the petroleum value chain’s financial sustainability – so as to eradicate the credit system and improve liquidity for procuring products.
