The Chief Executive Officer (CEO) of the National Petroleum Authority (NPA), Hassan Tampuli, has said a proposal by Bulk Oil Distributors for an alternative Conventional Buoy Mooring (CBM) facility has been sent to cabinet for possible approval.
He said the Attorney General, Madam Gloria Akuffo, has given her opinion on the issue and a decision will be taken in due course.
Mr. Tampuli’s comments come after a long wait by players in the downstream petroleum sector who have been pushing for an alternative mooring facility which is being spearheaded by Pexus Mooring Limited, an SPV set up by the Ghana Chamber of Bulk Oil Distributors (CBOD) for the development of a Single Point Mooring (SPM) facility.
They have insisted that the alternative facility would be a useful and necessary back-up facility for the existing mooring facility which was built in 2006.
An alternative facility, the BDCs say, will ensure uninterrupted supply of petroleum products in case the existing facility, the only one in the Tema enclave, breaks down and needs to be shut down for repairs.
Senyo Hosi, the Chief Executive Officer (CEO) of the Ghana Chamber of Bulk Oil Distributors (CBOD) argues that the country faces a severe supply risk for as long as it continues to depend solely on the All Buoy Berth (ABB) in the Tema enclave, which accounts for 75% of the products that flow into the country.
Mr. Hosi noted that proposals by the private sector for co-ownership of the ABB have been rejected by government. He lamented that efforts by the private sector to build an alternative facility have not received much attention or support from the government either.
Responding to these issues at CBOD’s ‘Energy Manifesto Town Hall’ event in Accra, the CEO of the National Petroleum Authority said the proposal from the bulk oil distributors has made its way to cabinet and a decision would be taken at the appropriate time.
“The matter has gone to Cabinet and we’ve gone to defend it,” Mr. Tampuli said. “The Attorney General has given an opinion and on the basis of that opinion a decision will be taken to secure the best interest of the Ghanaian people.”
Mr. Tampuli added that the All Buoy Berth is “one facility that’s of utmost importance to the Ghanaian people. 75% of our products pass through that and in the event we have a breakdown, only God knows when we are going to have products coming in. We will scramble for products through BRVs from our borders.”
Mr Tampuli stressed that the ABB facility was established under a build, operate and transfer (BOT) arrangement between the Ministry of Energy and Trafigura in 2006.
The NPA boss indicated that Trafigura operated the facility for 10 years and, as required by the concession agreement, handed it over to the government of Ghana. Government transferred the management of the facility to Tema Oil Refinery, which then entered into an agreement with a South African firm for the management of the ABB.
“In 2016, TOR invited a South African operator to take up 65% shares in that facility and by law, a foreign company cannot own more than 50% shares in the downstream,” Mr. Tampuli said.
Mr. Tampuli acknowledged that CBOD has applied for a license to operate an additional CBM. He noted that the establishment of an alternative mooring facility, even though laudable, is being hampered by the existence of an exclusivity clause in the contract between TOR and the South African firm.
“There is an exclusivity clause which says nobody can construct any such facility to receive petroleum products within a 70-kilometre radius. So, if you want to do a facility like that you have to go beyond Cape Coast all the way to the Western border,” Mr. Tampuli said.
He continued, “In this type of contract, if you are going to license another facility, you will be infringing on the existing contract. We had to gain the opinion of the Attorney General so we can move forward on that and this was because there is something called legitimate expectation of foreign investors.
So, three things were involved i.e the concession agreements, the infringement of the downstream minimum equity participation and security as far as supply of petroleum products is concerned.”
NDC promises to review existing agreement for alternative CBM
Emmanuel Armah Kofi Buah, a former Minister of Energy under the erstwhile Mahama administration said an NDC government would reconsider the genuine concerns of the private sector players and their push for an alternative mooring facility established.
He indicated that the NDC will engage players in the industry on decisions that would strengthen the private sector.
He said the arrangement between the South African firm and TOR needs “a second look to make sure that we address the concerns that are raised.” “I remember the option on the table is, for example, the BDC’s coming together to build an alternative CBM,” Mr. Buah said.
“Those are options that we are very anxious, ready to engage the private sector so that we can strengthen the private sector going forward.”