Investment Analyst slams activities of OMCs

Dr Raziel Obeng-Okon, an Investment Analyst on Wednesday said oil marketing companies (OMCs) which operates with a fixed or regulated price build-up vis-a-vis an open market pricing for their costs is a threat.

He made this known to Ghana News Agency (GNA) on the announcement by Bulk Distribution Companies (BDCs) plans to roll out a credit rating system that would deter­mine the credit-worthiness of OMCs.

Under the system, OMCs would be rated based on their credit history into four categories: tier-one, tier-two, tier-three and tier-four. Tier-one is the best rating while tier-four represents the worst rating.

According to BDC, tier-one and tier- two categories would receive products on credit while tier-three and tier-four would be compelled to purchase the products on cash-and-carry basis.

Dr Obeng-Okon who is the Chief Executive of CIDAN Investment explained that the capacity of imports by the BDCs cannot be sold on cash and carry basis because the OMCs cannot afford the amounts involved.

“The BDCs cannot survive without a certain regulated credits to the OMCs. Right now, a number of OMCs have increased their exposure with banking facilities in this high interest regime and this is hurting the business significantly by escalating the already high cost of operations within the sector,” he said.

Meanwhile the Association of Oil Marketing Companies (AOMCs) has reiterated the call by the BDCs to respect supply agreement entered with individual OMCs.

Mr Kwaku Agyemang-Duah, AOMC Chief Executive Officer has also rejected the claim by BDCs that OMCs are the main cause of fuel shortage in the country.

“It is pertinent that all relevant petroleum service providers and/or stakeholders put their shoulders to the wheel and redeem the industry to ensure reliable, sustainable and predictable supply of fuel to all and sundry,” he told GNA.

He expressed concern that the BDCs keep on shifting the goal post blaming everybody – “from government, to banks and now to the OMCs”.

Mr Agyemang-Duah who is also the AOMCs Industry Coordinator explained that OMCs/LPGMs contribute more than GH¢800 million annually to the nation’s coffers in respect of the excise, road levy and Tema Oil Refinery debt levy without PAYE taxes, by lifting petroleum products from the depot and distributing nationwide.

He said the industry also offers direct and indirect employment to more than 30,000 people, albeit with the controlled, regulated and small margins.

Mr Agyemang-Duah said the recent paucity of fuel supply has negatively impacted the volume of products sold, hence the related outturns for OMCs to survive to retain employees on payroll.

He expressed optimism that the measures being put in place by stakeholders would provide reliable supply of products.

On the issue of OMCs/LPGMs being asked to have “Bank guarantee” prior to lifting products by BDCs, he said the regulator should not be involved or drawn into commercial issues involving petroleum service providers in the spirit of deregulation but should rather play its roles constantly to ensure a level playing field.