The Ghana Chamber of Bulk Oil Distributors (CBOD) is dissatisfied by what it perceives to be a foreign invasion of the petroleum resource industry.
According to the Chamber, the National Petroleum Authority’s inability “to modify its license criteria to meet with the Ghanaian Content and Ghanaian Participation Policy for the Petroleum Downstream as finally agreed by Cabinet in March 2019” is fueling the development.
According to a petition to the Energy Ministry, CBOD, the downstream sector’s future remains bleak if the canker persists, while recommending that “policy and regulatory actions, in response to our petition, will preserve the President’s aspirations of delivering the commanding heights of our economy to Ghanaians.”
The statement was signed by CBOD Chief Executive Senyo Hosi and Board Chair Ivy Appiah Owusu, who maintained that the “continued misuse of the Policy by the NPA is threatening the long-term survival of the OMC and BDC subsectors.”
They feel this amounts to a violation of the industry’s faith and trust.
“It should be emphasized that the policy’s effect is not necessarily reliant on the passage of a Legal Instrument, but rather on the NPA Board’s administrative act to modify and detail the license criteria.”
The Chamber also stated that the policy outlines provisions on Ghanaian content requirements for various activities in the petroleum downstream, such as crude oil trading and shipping, oil trading, bulk oil distribution, oil marketing, and retailing of petroleum products at retail outlets, among others, in the domestic market, which are supposed to be reserved for licensed companies with 100 percent Ghanaian ownership.
The complete statement may be seen below:
As you are aware, indigenous participants in the business have progressed from kerosene resellers and foreign trade agents to successful entrepreneurs in the BDC, OMC, and Storage sectors.
You are also aware of the numerous frantic attempts by multinational merchants to integrate forward by establishing OMCs and BDCs in order to hinder the expansion and backward integration of indigenous Ghanaian firms. Fostering forward integration of IOTs by non-enforcement of the Ghanaian Content and Participation Policy will make it difficult for Ghana to establish its own British Petroleum, Sahara, Vitol, Trafigura, or Glencore.
You may recall that when IOTs had an oligopoly on product supply in Ghana in the early 2000s, supply premiums were set at $105/mt, but today, customers pay supply premiums of less than $60/mt under indigenous BDCs.
Indeed, indigenous BDCs will be outcompeted by these IOTs through minority partnerships and golden shares, resulting in an oligopoly controlled by IOTs in Ghana. We are confident that Ghana will face pricing exploitation as a result of this occurrence, and that its product security will be jeopardized. If this occurs on your watch, history will not be kind to your rule.
The NPA’s continued misuse of the Policy jeopardizes the long-term viability of the OMC and BDC subsectors of the industry, as well as violating the industry’s faith and trust.
It should be emphasized that the effect of the policy is not necessarily reliant on the passage of a Legal Instrument, but rather on the NPA Board’s administrative act of revising and specifying the licensing criteria.
Section 14 of the NPA ACT691 states, “A licence shall not be granted to an applicant unless the applicant has complied with any other requirement specified by the Board and any other relevant enactment.”
Indigenous ownership has long been a license requirement for those wishing to engage in the downstream petroleum business. The nature and scope of such indigenous inclusion have always been made public by the Regulator through public notifications rather than Legislative Instruments. The NPA is subject to the Minister’s policy guidance under Section four (4) of the NPA ACT.
We respectfully maintain the opinion that, with the policy authorized and legitimized by the cabinet, the NPA has behaved and continues to operate in violation of the law and policy.
In a speech, President of the Republic of Ghana H.E. Nana Akufo-Addo stated, “We shall measure our success by the delight that our people take in being free to handle their own business.”
It is our modest belief that the President’s policy and regulatory initiatives in response to our petition would maintain the President’s objectives of transporting Ghanaians to the commanding heights of our economy.
This will ensure that the President’s public pledges in this respect are not merely Speak-of-Poetry acted by Prose.
As a result, we will take all necessary actions, including legal interventions if required, to compel the NPA to comply with the order and nullify any license issued in violation of the approved policy since its passage in March 2019.
Consider this notice to be the mandatory notification under Ghana law of our plan to use additional government levers to enforce adherence to the legislation as outlined in the Ghanaian Content and Ghanaian Participation Policy. We rely on your true devotion to Mother Ghana, to do what is not only in the narrow interests of a few, but rather what strengthens Ghana for the future.
We remain.
Sincerely.