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Business News of Wednesday, 1 June 2016

Source: Graphic.com.gh

BOST, VLTC resolve impasse over lake transport rights

The Bulk Oil Storage and Transport Company (BOST) and the Volta Lake Transport Company (VLTC) have resolved an impasse between the two institutions over which of them had the right to transport fuel on the Volta Lake.

The long standing impasse was resolved through a memorandum of understanding (MOU) between the two institutions last year after the state lost millions of Ghana cedis in revenue which would have accrued but for the disagreement, This came to light when the Public Accounts Committee of Parliament submitted its report on the audit of the Unified Petroleum Price Fund in 2012.

The committee said in the report that the impasse had led to a significant loss of revenue to the state and thus called on the Ministries of Petroleum and Transport to dialogue and come out with clear and distinct guidelines on the operations of barges and landing facilities along the lake in other to avoid future disagreements.

BOST invested in the construction of two new barges, in addition to existing ones, which were capable of moving a total of 3.30 million litres of petroleum products at a go on the Volta Lake. However, after completion, the barges were made to lye idle at the port due to the impasse between BOST and VLTC.

The committee said it was informed by VLTC that as provided by the Volta River Development Act, 1961 (Act 46), VLTC was the only entity allowed to commercially traverse the Volta Lake and thus, as owners of the port, the barges and landing facilities built by the National Petroleum Authority on the lake should be handed over to them to operate.

The committee said per the MoU, BOST was the owner of the barges while the VLTC would be allowed to operate them on behalf of Bulk Oil Company. This makes it possible for BOST to earn revenue for its capital expenditure while VLTC gets paid for operating the asset.

Although the impasse had been resolved, the committee was of the opinion that the country lost some revenue during the period that the barges were lying idle due to the fact that BOST could not transport petroleum products to the Buipe depot in the Northern part of the country.

It said this situation rendered the UPPF zoning system impracticable, resulting in products being lifted, mostly by road, from the Tema Zone to retail outlets in other parts of the country. This led to increases in freight cost, it said in the report presented to Parliament.

In 2011 and 2012, the committee also observed that the UPPF recorded deficits of GH¢9.52 million and GH¢26.8 million respectively. It said the deficits were as a result of operational challenges on the part of the National Petroleum Authority (NPA).

It explained that as a rule, the UPPF discouraged cross zonal lifting of petroleum products whenever all zonal depots had stocks. However, it said in 2011 and 2012, oil marketing companies (OMCs) operated beyond the equalisation point through the lifting of products across zones.

This was due to the lack of stocks in some depots, which, in turn, resulted in an increase in the total freight cost to the fund. The committee said the deficits made it difficult for the fund to meet its obligations to OMCs and other creditors. — GB