Ghana’s domestic oil importers said on Friday they may take legal action against the government to recover interest on an outstanding debt of 384 million dollars that presents an early headache for the incoming government.
The debt was accumulated between 2013 and 2015 when Ghana’s cedi currency halved in value against the dollar, hitting importers who buy oil products on international markets in dollars but sell them in cedis to consumers at home.
The gap between the contract price the government pays importers and the lower sale price set by the National Petroleum Authority left the importers short as the currency fell.
“The continuous delay in payment has piled an unbearable financing cost,’’ the Chamber of Bulk Oil Distributors wrote in a Dec. 28 letter to the Finance Ministry.
“We will initiate steps, legal action not excluded to engage GoG (government) on the payment of interest on the verified claims,’’ said the letter by Senyo Hosi, the Chief Executive of the chamber.
He added that the interest amounted to 250 million dollars. There was no immediate comment from the government, while the incoming administration has yet to name its ministers.
The debt amounts to around one per cent of Gross Domestic Product (GDP), and is a problem for banks that loaned money to oil companies on the basis of the contract price and have yet to be repaid in full. This has led to non-performing-loans, several senior bank officials said.
Economists said the New Patriotic Party government, which takes power on Jan. 7, must resolve the issue if it is to meet the terms of a 918 million dollars International Monetary Fund deal.
The deal aims to reduce inflation and lower the fiscal deficit. Ghana began pumping oil in 2010 and exports around 100,000 barrels a day from offshore fields.
But with limited refining capacity, most domestic demand for oil products like petrol are serviced by around 17 oil distributors who import from overseas.
The cost of imports is politically sensitive because fluctuations hit the transportation, utilities and power sectors and feed inflation, which stood at 15.5 per cent in November.
People are paying more for petrol since a 27 per cent price hike in Jan. 2015 and deregulation of the sector in June that year.
“The bulk oil companies have been in effect funding subsidies for the government without getting paid,’’ Hosi said.
