Chief Executive Officer (CEO) of the Ghana Chamber of Bulk Oil Distributors (CBOD), Senyo Hosi, has attributed the shortage and subsequent rationing of dollar supply by the Bank of Ghana to the dependence of BDCs on the Central Bank’s ‘cheap’ forex auctions.
Speaking in a media brief on Thursday, Mr Hosi noted, the Central Bank compared to commercial banks in the country have lower forex rates.
Commercial banks he noted, sell a dollar for around GHS 8.5 (on forward rate basis) whereas the Central Bank sells a dollar for about GHS 7.74 in its forex auctions.
Mr Hosi asserts buying dollars from the commercial banks at a higher forex rate will mean higher prices at the pumps for Ghanaians.
“Banks don’t have the capacity to meet our dollar demands and even if they do, their forex rate is high and that will push pump prices up. And so because that, many BDCs will want to depend on the BoG which offers cheap forex,” he remarked.
According to Mr Hosi, should banks reduce their forex rate to match or near that of the Central Bank’s, BDCs will readily demand dollars from commercial banks.
The Central Bank somewhere in April this year, provided guidelines for the allocation of foreign exchange (FX) through forward auctions to Bulk Distribution Companies [BDCs] in the country
The guidelines are to govern the conduct of foreign exchange forward auctions on the interbank foreign exchange market for the BDCs licensed by the National Petroleum Authority (NPA).
According to the Central Bank, the forward FX auctions is intended to minimise the uncertainty of the future availability of FX and aid price discovery especially for the general pricing window within the downstream sector.
At the moment, some $450m is needed by the various BDCs to meet the country’s monthly fuel import.
However, the Central Bank is able to provide BDCs with only $100m, creating a demand gap of $350m.
Given the current situation, Ghana is said to likely face a looming fuel shortage crisis unless the BoG provides the needed $450m for fuel imports.
Ghana currently has only one month of fuel supply.
Source: norvanreports.com