A New Patriotic Party (NPP) government under the leadership of Nana Akufo-Addo will redeem government’s obligation to the Bulk Oil Distribution Companies (BDCs) if it wins the polls in December.
According to the party, this will help support local competition among the BDCs.
The NPP which captured the information in its 2016 manifesto said it will “support the growth of local competition by redeeming government obligations to the BDCs.”
[contextly_sidebar id=”fDUYFzga4yQY3WYFfAcT7qQmJx2PZC9u”]The promise comes on the back of huge debts the National Democratic Congress (NDC) government owes the BDCs which were incurred as a result of under recovery from subsidies on petroleum products.
Government is currently indebted to about 17 BDCs in excess of 500 million dollars.
Following the delayed payments, commercial banks that hitherto gave the BDCs loans to facilitate their businesses have also refused them benefits.
The CEO of the Chamber of Bulk Distribution Companies, Senyo Hosi in June 2016 complained that majority of bulk distributors of petroleum products will be forced to halt operations by the end of 2016 if government fails to pay debts owed them.
“We have liquidity heavily stacked. A number of BDC’s are not operational. We are using the private sector to fund government fiscal policy indirectly. That is what we have been doing. The debt is money we owe to the banks and not profits due us. A huge amount of the Banking sector’s Non Performing Loans are BDC debts. With more expected to be provisioned for in the coming months, the situation poses a systemic risk to the entire financial system,” he said.
Gov’t to issue bonds to settle indebtedness to BDCs
The National Petroleum Authority (NPA) had in May 2016 hinted of government’s plan of issuing a $530 million bond to raise funds to settle the debts.
The Chief Executive Officer of the NPA, Moses Asaga had also assured that the debts would be defrayed by the third quarter of 2016 but the promise is yet to be honoured.
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By: Godwin A. Allotey/citifmonline.com/Ghana
Follow @AlloteyGodwin