CBOD dismisses fuel hoarding claims, calls them “baseless”
The Chamber of Bulk Oil Distributors (CBOD), has kicked against allegations that some of its members are deliberately hoarding petroleum products from the market in anticipation of an expected fuel price hike during the second pricing window scheduled for Monday, March 16.
The Chamber described the allegations as baseless and challenged accusers to publicly name any members found hoarding products.
The controversy follows loading challenges that disrupted a number of oil marketing companies over the weekend, leaving a number of service stations across the country temporarily short of fuel.
While the situation has now been substantially resolved following an emergency intervention by the Chamber of Oil Marketing Companies, after an engagement with the National Petroleum Authority (NPA), the Ghana Revenue Authority, and relevant service providers, industry players have warned that fuel prices could still rise to as much as GH₵17 per litre from next Monday if market conditions fail to stabilise.
Speaking on Joy News’ The Market Place on Tuesday, the Chief Executive of the Chamber of Bulk Oil Distributors, Dr. Kwaku Ofori pushed back against what he described as an unfair targeting of some members of CBOD.
“I think we were just the easiest target when there were even technical difficulties,” he said. “When these challenges started over the weekend, initially it was blamed on the ICAMs. The ICAMs also felt that the integration with another service provider which is the DMS was what the challenge was. So, it took all of us, our intervention, for the issue to be resolved.”
He argued that the economics of the bulk oil distribution business make deliberate hoarding not only unlikely but commercially “self-defeating,” especially given the scale of capital involved and the volatility of the current global oil market.
“Unless you are not really familiar or conversant with how we operate, our market is hugely undercapitalised. Most of the products that we sell are being financed by the banks and the international oil trading companies. So, you mean to say that there is a local bulk distributor who can have access to a product or a cargo that is worth over $50 million and decide to hold on to the product after triggering the price on the day that I will sell it the following window, despite the excess volatility that we’re all anticipating?” he questioned.
Dr. Ofori pointed to specific geopolitical developments that had put Ghana’s foreign exchange situation under severe pressure as evidence of how volatile the operating environment was at the time of the allegations.
“We were all concerned that Ghana; the majority or most of our gold is exported to Dubai. Dubai airport has been closed, and the Asian market was virtually also on the verge of closing. So how was the country going to get forex to support our trading transactions? And when you decide to take these decisions, it can impact on your activities because, one, you don’t control the international prices,” he added.
He further noted that global crude prices had moved in the “opposite direction” that will make hoarding profitable, hence hoarding products for profit on the domestic market could harm distributors in the long run.
“We’ve also noticed just yesterday that prices have dropped, the Brent price has dropped. So normally when such accusations are going on, you can clearly say that it’s coming from a place of either misinformation or ignorance
“Not only that, we also have limited infrastructure facilities for you to do that. Currently there are some vessels that were supposed to even discharge that were having issues with ullage because the delay started over the weekend. So why is it that these dominant players, who still control the vessels coming in, would want to hold and then incur demurrages on the other side? When you do the math, it doesn’t add up,” he added.
He further argued that the competitive dynamics among bulk distributors where each company is racing to offload product and recover cash to repay their banks, makes it impossible for the kind of “coordinated hoarding” suggested.
“When prices were even falling, nobody was passing it on to the market because of the competition among ourselves, each and every one of us wants to dispose of the product. There are also those who are financing the product, who will allow you when your payment is due on Friday, knowing that the market is closing and that you need to settle down for them to release other products that are on financial hold to you. You think that they will encourage you to engage in such practices? At what cost to all the banks or the people who are financing the trade?” he quizzed.
The CBOD Chief Executive challenged regulators and accusers to publicly identify any member engaged in such practice for appropriate sanctions.
“We challenge the regulator and we also challenge those who are making the allegations that I think it’s about time that you name and shame, so that at least we get to know who is actually sabotaging or who is also doing the right thing,” he challenged
“That was why earlier on I said they should have access to the NPA portal and check the volumes that we’ve sold and those who have made commitments, there is none of them that we failed to honour those obligations, or that we are giving any excuses. So, it was very disheartening to hear some industry experts passing comment that impugns on our integrity as a business ethical group,” he lamented.
Dr. Ofori assured that there is no looming shortage as steps have been taken to procure enough products to sustain the market in the wake of the ongoing conflict in the Middle East.
“I can confidently say that for product supply security, the country is sorted. About eight cargos up to the end of the month have already been booked and confirmed. The vessels are on their way here. As I’m speaking to you, we have about three to four vessels at anchorage. So, in terms of product supply security, the country is sorted, and the good thing is also that we have about 30% of our demand covered by local production,” he assured.
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