Cedi Depreciation Hits Oil Importers

Senyo Hosi
The rate of depreciation of the local currency is taking a heavy toll on the operations of businesses in the country, particularly companies that import petroleum products.

The situation has made it difficult for Bulk Oil Distributors (BDCs) to access new credits from banks to facilitate the importation of crude.

According to Chief Executive of the Chamber of Bulk Oil Distributors, Senyo Hosi, the development could result in serious shortage of petroleum products in the coming weeks, as credit lines have been shut to importers.

Mr Hosi said most banks are not satisfied with the dollar rate at which government buys the products from distributors.

‘If banks in the country would not be allowed to contractually engage BDCs operate at their own FX rates or rates that are more reasonable and they are going to have government still set the FX rates in the price build up, rates which they [banks] may consider uncomfortable, they are not likely to fund us.’

Mr Hosi said the cedi’s volatility makes the prospect of funding BDCs a difficult task for creditors, especially when the forex rates are regulated by the government.

Meanwhile, the current total debts owed the Chamber of Bulk Oil Distributors by government has hit GH¢2 billion.

Government is said to have expended about GH¢20 million in efforts to shelve consumers from paying the actual price of petroleum products at the pumps.

The decision to subsidise or not, according to the chamber, is the sole preserve of government and for that matter it should have the financial muscle to fund such activities.

However, the review of the 2015 budget which allotted GH¢50 million only to petroleum subsidies, as well as the Minister of Finance’s suggestion that no further FX under-recovery will be entertained suggest government lacks the commitment or capacity to sustain subsidies on petroleum products.

Importers of petroleum products have raised concerns that the government is likely to pursue a policy to compound the debt.

‘We are concerned that this will dampen the funding confidence to the industry,’ said Hosi.

The local currency has depreciated by a little over 10 percent against the dollar from January this year.

A dollar now sells at GH¢3.76 at the forex bureau.

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