The rapidly depreciating cedi and the rising price of fuel on the global market, according to Daisy Attu Gyabaa, Head of Corporate and Industry Operations at the Ghana Chamber of Bulk Oil Distributors, are what are driving consumer prices in Ghana.
The money made from selling gasoline products in the country, when converted into dollars, is unable to cover the cost of the product on the international market, she noted, due to the rapid depreciation of the cedi.
She claimed that as a result, BDCs are no longer able to make product payments to their suppliers.
“Basically, the BDCs that are members of my Chamber source fuel from the international market and transport it to Ghana so that we can purchase it at the pump and use it to run our automobiles, industries, go to work, and other things. However, we purchase our goods in US dollars and ship them to Ghana.
“Obviously we can’t sell in Ghana in cedis so we translate that FX into cedis and sell to OMCs. So OMCs buy from us in cedis sell to consumers in cedis, get their money back in cedis and pay BDCs back. But BDCs went to the international market to buy the product in USD, so the cedis they’ve earned has to be translated into FX and sent back to pay the suppliers.
“So that’s where the problem is. We all know what has happened with the cedi depreciation, how high it’s been, how fast it’s depreciated, that is where the problem lies. We don’t have enough FX to be able to pay our suppliers,” she said on JoyNews’ PM Express. Daisy Gyabaa said while the Bank of Ghana has been able to step in to provide the industry with some guaranteed $120 million monthly to support the industry, it pales in the face of the $400 million needed every month to meet the country’s demands.
Thus BDCs have to rely on commercial banks and other FX institutions that charge higher rates to be able to meet their monetary demands. These accumulated factors, she said, is what has led to the sharp fuel increments at the pump in the past few months.
“That leaves us in excess of $280million dollars. So you need to go to your commercial bank, any other source you can get legally. So you go to commercial banks, other people who trade in FX, maybe you have deals with them to be able to get FX, to be able to pay your suppliers.
“But the issue here is that while BoG offers us a good rate that is significantly lower than what the market or commercial banks will offer, it still only fulfills 30% of what we actually need. Therefore, the BoG’s concessionary rate cannot be translated into price.
“Because if I’m supposed to get a 100 but only get 30, and assume BoG gives me a rate of currently, let’s say 12, and I have to go to the market and get it at 15 or 16, when I put those two together I’ll still be hovering around 15 let’s say it really won’t make a dent in what I need to be able to price it lower for us to make a profit,” the author explains.