Business News of Wednesday, 21 March 2018
Founder of mPedigree, a technology firm, Mr Bright Simons has waded into the ongoing media war between Bulk Oil Storage and Transportation Company(BOST) and Chamber of Petroleum Consumers Ghana(COPEC) over the sale of the ‘controversial’ 1.8millions of crude to BB Energy by BOST.
He believes the matter should not have gained the ongoing ‘unnecessary’ media debate since it is a straightforward issue which can be determined by the Minister of Energy whether the sale was fraudulent or not.
COPEC has been accusing the Management of BOST for causing financial loss to the state by trading off 1.8million barrels of crude at $54 per barrel when the price of crude on the world market at that time was $56 per barrel.
According to COPEC, BOST made the state to lose some GHC 30million hence they should be held accountable for their action.
The Management of BOST at a press conference last week contested these claims noting that it did nothing wrong as claimed by COPEC.
Not satisfied by the response of BOST, COPEC on Monday, March 19, 2018, petitioned the Special Prosecutor to investigate the issue and ensure that sanctions are applied against the Management of BOST.
However, Mr Bright Simons, who is also the Vice President of IMANI Ghana is worried about the development.
“This s a very straightforward matter that should take three phone calls by the Energy Minister to determine if something shady has gone on or not. And then apply the necessary sanctions or confirm to the nation that we can relax. What is the point of the national debate?” he said in a Facebook post sighted by MyNewsGh.com.
As for the BOST thing, I can’t get my head around the controversy.
Crude oil was bought on the spot market when the average price was about $46 in 2016 for a ramshackle refinery that couldn’t use it. The supplier wasn’t paid and wanted their money. So in September 2017, the cargo was again sold in the spot market for about $54 when the average spot price was about $56.
Crude oil pricing on the spot market has never been rocket science.
You take the benchmark price, in this case $56 at the time of sale. You then look at two main variables: 1. Assessment of quality relative to the benchmark and 2. Shipping/transportation costs.
If the buyer is responsible for transportation costs they get a discount. If the quality is somewhat lower than the benchmark, they get a discount. If, on the other hand, the seller is responsible for the transport and/or the quality is somewhat higher, the buyer pays a premium. The relevant facts, in this case, should establish unambiguously whether the $2 discount granted BB Energy in 2017 was proper. No long things.
This is a very straightforward matter that should take three phone calls by the Energy Minister to determine if something shady has gone on or not. And then apply the necessary sanctions or confirm to the nation that we can relax. What is the point of the “national debate”?