Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors (CBOD), Mr Senyo Hosi has assured banks that government is working round the clock to clear all debts by the third quarter of the year.
According to him, Finance Minister Seth Terkper and the Bank of Ghana (BoG) Governor, Dr Abdul Nashiru Issahaku, are leading deliberations to finalise a structure to pay off the debt by July 2016.
He was reacting to fears expressed by banks which have Bulk Oil Distribution Companies (BDCs) debt on the books to the effect that the debt threatens their very survival and poses a major risk to the financial system.
In January this year, government paid over GH₵600 million to Bulk Oil Distribution Companies, with a promise to pay the rest in due course.
This represents a fraction of the GH₵2.5 billion owed the Bulk Oil Distribution companies.
The GH₵2.5 billion debt, which has been on the books of some big banks in the country, made it difficult for them to lend to various institutions and individuals.
Managing Director of Fidelity Bank, Edward Effah recently said debt owed by BDCs is one of the biggest threats to the growth of the financial sector this year.
Several other banks have expressed similar feelings.
In response, Mr Hosi, who sympathised with the banks, allayed their fears, explaining that the debt would soon be a thing of the past as the tireless efforts of the Finance Minister and the BoG Governor have resulted in concrete plans to pay off the debts not later than the third quarter of this year.
He allayed the fears of consumers, stating that the country has more than adequate stocks of petroleum products.
While admitting that bank financing has dwindled, he indicated that policies embarked upon by the National Petroleum Authority (NPA) and the Minister of Petroleum has encouraged direct funding from foreign suppliers.
The BDC concept was mooted sometime in 2007 by the National Petroleum Authority (NPA) and some key stakeholders to enable private Ghanaian investors who had the capacity to import finished petroleum products to augment the production of Tema Oil Refinery (TOR).
Private Ghanaian investors supported the idea and have since invested heavily for the national cause.
Indeed, when the refinery was in distress and could not produce, these private BDCs came in handy to keep the Ghanaian economy going by ensuring petroleum product were available.
Apart from supporting the national economy with products, these private investors provided employment for hundreds of Ghanaian who hitherto would have been on the streets.
Under the then price-regulated market, these investors pile up debts in the form of price under-recovery and foreign exchange losses, running into millions of dollars, with the hope that the government will pay the debts incurred in their bid to support the economy and also keep their businesses running.
Source: The Finder