Business News of Wednesday, 22 February 2017
The decision by the Ghana Oil Company (GOIL) Limited to establish GO Energy about two years ago to procure and distribute petroleum products to its retail outlets has increased the company’s market share to 23 per cent.
According to GOIL officials, increased investment in the company’s operations through the setting up of GO Energy, coupled with the building of the capacity of its human resource, had ensured operational efficiency.
That move had given GOIL leverage over major competing oil marketing companies (OMCs) in the downstream petroleum sector.
“Product procurement, distribution and sales and ensuring security of supply have seen GOIL controlling about 23 per cent of the petroleum retail market, supplying about 60,000 metric tons of products on a monthly basis,” the Chief Operating Officer (COO) of GOIL, Mr Alex Adzew, told the Daily Graphic in Accra in an interview.
GOIL’s retail outlets, he said, stood at 290 as of the end of December 2016, from 165 prior to the deregulation of petroleum prices.
According to Mr Adzew, the deregulated regime had additionally provided a framework for GOIL to adopt strategies that had contributed massively to its profitability.
He said whereas the deregulated regime introduced competition among the about 100 OMCs, market dynamics were, however, factors that often influenced GOIL’s pricing decisions.
He indicated that most of the time GOIL did not hurriedly increase the prices of products at its vending stations when the increment window opened periodically.
“We monitor what is happening on the international front, look at the forecast and plan appropriately by looking at the open market prices. This is done to ensure that the margin of increase does not overburden the consuming public,” he said.
He pointed out that the ex-refinery price, sudden downward trends and market dynamics were factors that went into the consideration of pricing to ensure people were not disadvantaged.
Mr Adzew debunked suggestions that the government could still be subsidising GOIL, in spite of the deregulation policy, saying: “GOIL plans properly and sets its priorities right in the setting of prices for its products.”
“It will be odd for anybody to suggest that the government is still subsiding GOIL after the deregulation policy had come into effect in July 2015. If government has the money, why won’t it use it to offset the debts owed GOIL, instead of subsiding our products?” he asked.
He pointed out that a subsidy regime would still require the use of the taxpayers’ money if consumers were not made to pay for the full cost of the products.
GOIL, he said, had been listed on the Ghana Stock Exchange, with government shareholding standing at 34 per cent, while the remaining was among the Social Security and National Insurance Trust (SSNIT), the Bulk Oil Transportation and Storage Limited (BOST) and some 16,000 individuals and organisations.
“We may not be making super profits, nor are we making losses, for keeping our prices relatively lower at the pump than other OMCs. Our accounts are available on the stock market on a quarterly basis for anybody to check and confirm these facts,” Mr Adzew said.
The COO of GO Energy, Mr Gyamfi Amankwah, also told the Daily Graphic that the formation of GOIL’s own bulk distribution company (BDC), GO Energy, had ensured the reliability of supply to the company’s retail outlets.
He indicated that prior to the formation of GO Energy, GOIL used to take products from private BDCs, noting that that saw setbacks in its operations each time the BDCs had challenges with the commercial banks.
“This affected GOIL’s operations, as we often had to pre-finance before we got products for our vending stations and that affected profits. So we conceived the idea of coming up with our own BDC to address incidents of shortage of products, as well as ensure efficiency in our operations,” Mr Amankwah said.
He said GO Energy, apart from supplying GOIL retail outlets, also supplied products to other stations, including some of the multinational OMCs.
He appealed to the public to endeavour to support the company in its quest to ensure that indigenous Ghanaian companies played a big role in the downstream oil sector, as against leaving the entire retail chain in foreign hands.