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16.12.2019 Business & Finance

BOST MD Justifies Increase In Petroleum Price Build-Up

By Norvan Acquah-Hayford
BOST MD Justifies Increase In Petroleum Price Build-Up
LISTEN DEC 16, 2019

The Managing Director of the Bulk Oil and Transport Company Limited (BOST), Edwin Provencal, has justified the 100% increase in the petroleum price build-up levy from 3 pesewas a litre to 6 pesewas.

According to him, approving the implementation of the adjusted BOST margin levy will ensure efficiency in the running of the organisation which for some time have been grappling with inefficiencies.

BOST says its equipment are obsolete and most of them have broken down.

Speaking to Joy Business after the directive by the National Petroleum Authority (NPA) to increase the margin by 100%, Edwin Provencal said the increase was critical to the survival of the company.

“The current BOST margin of GH¢0.03, was implemented in 2012 and has not been adjusted since then even though Parliament has ratified that it should be increased to GH¢0.06 in 2017. Meanwhile, the company needs more revenue to bring in more products, build infrastructure and trade, among others.

"Increasing it is important for the wellbeing of the company considering the state of our current infrastructure which needs to be either repaired or replaced entirely,” he said.

The directive by the NPA has sparked resistance, with the Chamber of Petroleum Consumers-Ghana (COPEC) taking on the NPA for the increase.

Also, the Minority in Parliament is demanding the immediate withdrawal of the 100 per cent increase imposed on BOST margins on petroleum prices.

The Authority, in a directive, ordered all Oil Marketing Companies (OMCs) and LPG Marketing Companies (LPG-MCs) to apply an upward review of a combined ¢0.04 pesewas increase to pump prices.

Per the directive, the controversial BOST margin which currently stands at ¢0.03p/litre or some cumulative 10,200,000.00 from consumers is to be increased by 100% to a new rate of ¢0.06p/ litre or some cumulative 20,400,000.00 from consumers based on current conservative estimates of some 340 million litres of fuel consumed monthly.”

But Mr Provencal expressed shock at the resistance from some stakeholders at a time that the company is show prospects of making one that can pay a dividend to government in many years.

He disclosed that the increase in margin got approved by Parliament in 2017 after several calls on them to have it upped to help raise funds for the company to replace its equipment’s which included the power barges which carried petroleum products on the Volta Lake.

Managing Director of BOST said he was dedicated to transforming BOST but to be able to do that requires heavy investment in infrastructure and to generate the needed revenue to do that requires that the BOST margin be increased.

“We are determined to become the best in storage and transportation in terms of revenue market share which means we must have the best storage and transportation infrastructure to transport the products throughout the country at the minimum cost. All we need with the push in the margin,” Mr Provencal stated.

Until recently, the company’s challenges which were also financial led to the shutdown of the Volta Lake Transport Company VLTC which transported petroleum products from Akosombo to Bupei to serve the northern market and customers of Burkina Faso to shut operations.

He added that the motive is to be able to generate enough Internally Generated Fund (IGF) to enable BOST to pay a dividend to the shareholder, which is the country, as well as promote the provision of affordable energy to reduce the cost of electricity.

BOST is currently not able to fulfil its mandate due to its inability to bring in petroleum products at a competitive price that will enable it to control and influence the market price.

The company has 51 petroleum storage tanks across the country, out of which 15 have been decommissioned as a result of malfunctioning components and also 86 kilometres (km) out of its 361km of pipeline infrastructure is inactive.

Joy Business understands that to turn BOST around the company needs an investment of about $150million out of which $65million which will be invested into infrastructure.

The return in infrastructure investment should lead to doubling of depot revenue from $10.2million to $20.4million, increase in pipeline revenue and barge revenue, as well as an increase in trading revenue from $55million to $785million.

—JoyBusiness

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