The African Centre for Energy Policy (ACEP) has voiced significant concerns regarding the operational trajectory of Ghana’s Bulk Oil Storage and Transportation Company (BOST) and its potential privatization. ACEP’s core argument revolves around BOST’s deviation from its original mandate of maintaining strategic petroleum reserves and its increasing involvement in commercial activities, creating an uneven playing field with private sector competitors. Established to ensure national energy security, BOST has gradually transitioned into a commercial entity, competing directly with private companies in the oil market. This shift raises critical questions regarding its role, efficiency, and the implications for the broader energy sector in Ghana. ACEP argues that BOST’s current structure, benefiting from tax exemptions and substantial annual margins while competing with taxed private enterprises, creates an unfair advantage and distorts market dynamics.
ACEP’s concerns stem from the belief that BOST’s current operational model deviates from its intended purpose. The company, initially designed to safeguard national energy security by maintaining strategic petroleum reserves, has increasingly shifted towards commercial operations. This transition has placed BOST in direct competition with private sector players in the oil market, raising concerns about fair competition and the potential crowding out of private investment. ACEP argues that BOST’s privileged position, receiving GHS 600 million annually from margins and operating tax-free, creates an uneven playing field. This financial advantage, coupled with its control over 20% of the import market, allows BOST to compete aggressively, potentially stifling the growth and competitiveness of private businesses in the sector.
The debate over BOST’s role and future has intensified with the think tank’s call for the company’s privatization and listing on the Ghana Stock Exchange. ACEP advocates for this move as a means of promoting transparency and efficiency within BOST’s operations. By subjecting the company to market forces and public scrutiny, privatization could potentially address the concerns surrounding its current operational model and financial structure. A publicly listed BOST would be accountable to shareholders and subject to regulatory oversight, ensuring greater transparency and potentially driving improvements in efficiency and performance. This transition, ACEP argues, would create a more level playing field within the oil market, fostering healthier competition and promoting private sector participation.
Instead of BOST’s current model, ACEP proposes a more decentralized and market-oriented approach to ensuring strategic oil reserves. The think tank recommends implementing regulations that require Bulk Oil Distribution Companies (BDCs) to maintain minimum stock levels. This strategy would distribute the responsibility of maintaining reserves across the industry, potentially reducing the reliance on a single entity like BOST and promoting greater market resilience. Furthermore, ACEP suggests incentivizing International Oil Traders (ITOs) to store products in Ghana. By offering attractive storage options and incentives, Ghana could attract significant volumes of oil from global traders, creating a substantial buffer for national supply security and reducing the risks associated with relying solely on domestic reserves.
ACEP’s analysis also highlights the evolving refinery landscape and its implications for BOST’s current structure. With the changing dynamics of the refining sector, the necessity of BOST’s current model, particularly its margins and operational structure, comes into question. ACEP contends that the private sector could potentially deliver similar services, including the maintenance of strategic reserves, at a lower cost and with greater efficiency. This raises questions about the long-term viability and cost-effectiveness of maintaining BOST in its current form. The think tank argues that a comprehensive review of BOST’s operations is crucial to ensure a more efficient and cost-effective approach to managing national energy security.
In conclusion, ACEP’s concerns about BOST’s evolving role, coupled with its call for privatization, highlight the need for a critical reassessment of the company’s operations and its alignment with national energy security goals. The debate centers on the balance between maintaining strategic reserves and promoting a competitive oil market. ACEP’s recommendations for a more decentralized approach, involving BDCs, ITOs, and a potential privatization of BOST, aim to create a more resilient, efficient, and transparent system for ensuring Ghana’s energy security. The think tank’s call for a comprehensive review of BOST underscores the importance of adapting to the changing energy landscape and ensuring that national strategies remain effective and aligned with broader economic goals.
