The Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE), Benjamin Nsiah, has welcomed the government’s decision to liberalise aspects of Ghana’s petroleum downstream sector, particularly the operation and ownership of petroleum depots.
Speaking in an interview with 3Business on September 7, Nsiah described the policy as “timely and very justified,” arguing that the previous arrangement, under which the Bulk Oil Storage and Transportation Company Limited (BOST) played a dominant role in depot operations, had not delivered the desired benefits in terms of price stability and competition.
“Over the years, we’ve seen BOST run a monopoly of this particular policy, and this monopoly policy has not yielded any positive impact in terms of price stability and also pricing competitiveness in the petroleum downstream.” He stated.
According to the Executive Director, allowing Bulk Distribution Companies (BDCs) to establish and operate their own depots across the country could introduce greater competition and efficiency into the sector.
He believes this could ultimately translate into lower petroleum prices for consumers, as inefficiencies would be less likely to be passed on to consumers.
Nsiah also endorsed the decision to allow private BDCs to hold strategic petroleum stocks. He argued that this could strengthen Ghana’s energy security, particularly at times when BOST may face liquidity or financial constraints that limit its ability to procure adequate strategic stocks.
“If we also allow BDCs to store strategically, I think that it will also go a long way to ensure our energy security in terms of petroleum energy security, in terms of accessibility of the product, and the affordability of the product.” He noted.
On the proposed conversion of the BOST margin into an infrastructure margin, he said the policy could help address longstanding infrastructure challenges in the petroleum downstream sector.
He argued that despite the collection of the BOST margin over the years, critical infrastructure had continued to deteriorate without sufficient modernisation.
“Over the years, we’ve seen BOST infrastructure depleting, even though they take the BOST margin, and they have not even upgraded or modernized this infrastructure.” He added.
He therefore welcomed a system under which the infrastructure margin could be accessed by other BDCs and relevant state agencies to improve petroleum storage, logistics and distribution infrastructure across the country.
Nsiah concluded that the reforms could help create a petroleum downstream sector characterised by greater transparency, good governance, modern infrastructure, energy security and affordability.
By Coffie Mawuedem Noel
