Crude Oil: Find other means of finance

Page 3 Jan 12/01/08

Story: Charles Benoni Okine
THE Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, has called on the oil marketing companies (OMCs) to find other means of financing the purchase of crude oil on the international market to reduce the pressure on the Bank of Ghana (BoG).
He noted that the BoG always had to fall on the country’s foreign exchange reserves to finance the product on behalf of the OMCs, a situation that could have serious consequences for the economy.
He noted that the skyrocketing crude oil import bill in the country might negatively impact on the country’s foreign exchange reserves and said the OMCs could depend on other sources to allow the state to build its reserves to serve other equally important purposes.
Mr Baah-Wiredu made the call in an interview in reaction to the country’s high import bill on crude oil which is said to be taking a toll on the country’s foreign exchange reserves and added his voice to calls for the prudent and economic use of petroleum products in the country.
Ghana’s oil import bill reached more than $2 billion in 2007, almost three times the bill for 2004, which stood at $775 million.
The increase has been attributed to the increasing price of crude oil on the international market and the high demand for crude oil products in all sectors of the economy.
Since the deregulation of the downstream petroleum sector some two years ago, the OMCs have been allowed to bring into the country some amount of finished and unfinished products.
As a result of the huge amounts of foreign currency required to purchase the products, the OMCs are said to have fallen on the BoG on many occasions to finance the purchase of the product, a development which Mr Baah-Wiredu described as not being the best and healthiest for the country.
On the use of fuel within public institutions such as the ministries, departments and agencies (MDAs), the Finance Minister said all efforts would be made to ensure that they strictly adhered to the instructions for the economic use of petroleum products.
According to him, although a reduction in the consumption of fuel products within the MDAs would be marginal in terms of cost, it would be an important step towards cutting down on the fuel imported into the country.
He was quick to add that there had been some progress made in terms of a cut in consumption since the directive for a reduction in the consumption of fuel within the ministries was announced.
Mr Baah-Wiredu also entreated the private sector and individuals to ensure that they cut down on the use of fuel to reduce the quantity to be imported into the country.
He said there were other factors that had contributed to the significant increase in the oil import bill of the country and mentioned the increased construction activities in the country in terms of roads and other infrastructure as one of them.
He said the mining sector had also witnessed growth, while the manufacturing and industrial sectors were also booming.
Mr Baah-Wiredu said since all those sectors depended heavily on crude oil products to move their businesses, the oil import bill was likely to move up.