The Bulk Oil Storage and Transportation Company (BOST) has defended its decision to sell off contaminated or off-spec product to oil company, Movenpiina.
Documents sighted by Citi Business News indicate that BOST has agreed to sell 5 million litres of the product to the company at a cost of 1 cedi per litre.
This is viewed by some industry watchers as amounting to an estimated 7 million cedis loss in revenue.
But a statement from BOST and copied to Citi Business News said the option was the most appropriate one considering the potential loss in revenue.
“The first option is to have a corrective treatment of the off-spec product at TOR but this option was however not possible because TOR is not refining at the moment.”
“The second option was to gradually inject a total of about seventy thousand (70,000) litres of the off-spec product into ten million litres (10,000,000) of normal product over a period which will take about ten (10) solid months for BOST to accomplish. The implication of this option is however the opportunity cost of losing the commercial value of over five million and seven hundred thousand Ghana Cedis (GHS 5,700,000). This arrangement would have deprived the BDCs of getting space to store their products. The capacity of the tank holding the off-spec product is twenty million litres (20,000,000 lts).”
“The third option involves the selling of the off-spec product at a competitive ex-depot price. Comparatively, the possible revenue loss here cannot outweigh the loss in Option 1 and 2.”
“Clearly, OPTION 3 was the ideal from a business point of view,” the statement added.
Commenting on the suggested potential loss in revenue considering the 1 cedi per litre price offered to the company, BOST dismissed the assertion indicating that could not have been true.
“BOST sold the off-spec product at One cedi, thirty pesewas (1.30p) per litre as against the normal ex-depot rate of One Cedi, seventy –five pesewas (1.75p) for normal products. Thus 26 percent discount off the normal product and this is the normal and acceptable practice in the industry.”
“The assertion that the off-spec product should have been sold at two cedis, fifty pesewas (2.50p) is misleading because ex-depot price and pump price are completely different. BOST only sells products at ex-depot rate.”
Even though some have raised concern over the industry regulator’s ability to control the potential harm to unsuspecting consumers, BOST maintained that it is in synch with its allied agencies such as NPA to foil any such moves.
“BOST’s responsibility is to sell off-spec products to a qualified company and it is important to note that, off-spec products are used by the steel, garment, petro chemical companies to run their machinery and certainly not for the running of vehicle engines. It can also be used as mixture for asphalt and turpentine to prevent decay of wood, etc and therefore cannot fathom how possible off-spec products could be sold to unsuspecting consumers for whatever reason.”
“That notwithstanding, it is a fact that, NPA is fully in control as usual and will not allow this to happen.”