The Bulk Oil Storage and Transportation Company (BOST) has finally come out to defend its deal with TSL Logistics saying it would improve the supply and pricing of petroleum products in the country.
BOST has contracted TSL to manage its Accra Plains Depot on pilot basis till the end of the year as part of initiatives to turn around the dwindling fortunes of the company.
According to BOST, the risks associated with the management of the facility which has led to product and financial losses over the years are now expected to be well managed with TSL’s bank guarantee.
Management and the board believe this would improve the efficiency of the company to fulfil its core mandate of managing the country’s strategic oil reserves.
This is consequently expected to make the de-regulation policy more effective and thereby ensure price stability of fuel in the country.
The Ghana Chamber of Bulk Oil Distributors are however contesting the deal in court insisting that TSL is not duly liscenced to undertake the services spelt out in the contract.
It also argues that the deal was also amounts to a breach of the Public Procurement Act because it was not opened for bidding.
The chamber therefore wants the deal abrogated because local industry was not engaged.
But at a media encounter on Wednesday, 16th April 2014 BOST’s Managing Director, Kingsley Kwame Awuah-Darko explained even though the local distributors were informed about the deal, they were not invited to bid because they are in principle not qualified to participate.
“The principle is that if you operate as a Bulk Distribution Company (BDC) we cannot allow you as BOST to operate our terminals whether you are Ghanaian or not. This is because BOST must remain an open system and we must avoid the conflict of interest. To explain, part of the problem we inherited was the issue of reconciliation. Who was the reconciliation with? BDC and BOST. They said we have brought in this product, we said you have brought in this amount.
“The initial amount the BDC’s were claiming was 54 million dollars. If they were the ones operating those terminals we would never have been able to negotiate it down to what is more accurate figure of 33 million dollars. Which means that the state, that is you and I would have lost an extra 21 million dollars we didn’t or shouldn’t have lost” he explained.
The Chamber had argued that the BDCs have better capacities to manage BOST facilities compared to TSL and are therefore willing to even form a consortium to execute the deal.
But Mr. Awuah Darko maintains it is not a question of capacity as opposed to conflict of interest –adding that the BDCs don’t even have the ISO certification which was a major requirement of the deal to address the company’s foreign exchange trade losses.
Mr. Awuah Darko also dismissed suggestions that there was sole sourcing of the contract to TSL which amounts to a breach of the Public Procurement Law.
He added that, contrary to views that the deal defeats government’s local content agenda, it is rather in line with it.
“We inserted a clause in the agreement that requires TSL to become indigenous before the end of the twelfth month. So for some of those BDCs that think they want to be in this business, they need to talk to a lot of people and see if they can help in the indigenization of a company like TSL. This is because we recognize that and so it’s not after the BDCs came out that we now went back and said to TSL to meet that.
“In the contract we signed with them, we said we are an environment where indigenization and ownership of the commanding heights of this economy is a very political condition of our government. At this point in time we need your help but within the twelfth month pilot I am telling you in black and white, if you don’t indigenize, we’ll part ways at the end of twelve months and it is in our contract so we’re mindful of it” he noted.
Mr. Awuah Darko also emphasized that they have an approval letter from the National Petroleum Authority for TSL to undertake the services in the deal -contrary to allegations that the company is not licensed for that.
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