Ghana's petroleum downstream sector has seen a significant expansion following Government's deregulation policy, Vice President Alhaji Mahmud Bawumiah has said.
Speaking at the 3rd edition of Ghana International Petroleum Conference (GhIPCon) 2019 in Accra, the vice president said the deregulation policy has given rise to a significant number of new entrants licensed to operate as Petroleum Service Providers (PSPs) in the industry.
"Following the deregulation of the petroleum downstream sector in Ghana, the sector has witnessed significant investment and expansion of petroleum products storage and outlet facilities," he said.
"This investment has been championed by the private sector which is mostly dominated by a growing number of indigenous Ghanaian companies.
"For instance, over the past eight (8) years, the industry has grown from a total of eight (8) Bulk Distribution Companies (BDCs) to thirty-five (35). The number of Oil Marketing Companies (OMCs) has grown from eighty one (81) to one hundred and fifteen (115)"
Dr Bawumia also revealed as at May 2019 8 there are nineteen (19) companies providing support services for the sector in areas such as tank calibration, Underground Storage Tank (UST) and Above Storage Tank (AST) cleaning, Non-Destructive Testing (NDT), amongst others .
The Ghana International Petroleum Conference (GhIPCON) is Ghana’s foremost Petroleum Downstream Conference organised under the auspices of the Ministry of Energy, National Petroleum Authority (NPA) and the Ghana Chamber of Bulk Oil Distributors (CBOD). GhIPCON is designed to actively bring to the fore the operating industry’s perspective and guidance on issues of governmental and regulatory policy as well as best practices for the advancement of the industry not only in Ghana, but across the West African sub region and beyond.
The 3rd edition of Ghana International Petroleum Conference (GhIPCon) 2019 was held on Wednesday at the Movenpick Ambassador Hotel under the theme “Regional Collaboration; A Catalyst for Transformation”.
The Vice President has also given assurance to stakeholders in the petroleum downstream industry that government will create an enabling environment for downstream business to thrive competitively, efficiently and with the highest of safety standards.
Below is the full speech by the Vice President.
It is with great pleasure that I am here as Special Guest of Honour, to this all-important 3rd edition of Ghana International Petroleum Conference (GhIPCon) 2019.
Let me take this opportunity to thank the organizers for rolling out this petroleum downstream event. I should also thank you, distinguished ladies and gentlemen, for your participation and contributions to the success of the event, especially to our good friends from neighboring countries in the West African sub-Region.
The theme for this year: “Regional Collaboration; A Catalyst for Transformation”, is most appropriate coming on the heels of the launch of Continental Free Trade Agreement and the choice of Ghana as its headquarters, and also judging from recent developments in the petroleum downstream industry across the Ghanaian market and the sub-region.
The Aftermath of Deregulation
Mr. Chairman, as a government, our belief in a fair, competitive and a well-regulated market is not in doubt. And for the fact that the performance of the downstream petroleum market directly affects the lives of millions of Ghanaians daily, we take seriously the behavior of all the players in the market.
Following the deregulation of the petroleum downstream sector in Ghana, the sector has witnessed significant investment and expansion of petroleum products storage and outlet facilities. This investment has been championed by the private sector which is mostly dominated by a growing number of indigenous Ghanaian companies.
This has given rise to a significant number of new entrants licensed to operate as Petroleum Service Providers (PSPs) in the industry. As a result, there are currently over two hundred and fifty (250) licensed companies across the value chain and over fifteen (15) different license categories providing support services.
For instance, over the past eight (8) years, the industry has grown from a total of eight (8) Bulk Distribution Companies (BDCs) to thirty-five (35). The number of Oil Marketing Companies (OMCs) has grown from eighty one (81) to one hundred and fifteen (115).
There are now nineteen (19) companies providing support services for the sector in areas such as tank calibration, Underground Storage Tank (UST) and Above Storage Tank (AST) cleaning, Non-Destructive Testing (NDT), amongst others as at May 2019.
Role of Government
Ladies and Gentlemen, let me take this opportunity to assure the petroleum downstream industry that government will create an enabling environment for downstream business to thrive competitively, efficiently and with the highest of safety standards. Here are some specific initiatives in the gas sector.
First, Government, through the Ministry of Energy is in the process of ensuring institutional and regulatory re-alignment of the midstream gas subsector to bring clarity and a degree of certainty to players within that subsector. The Minister for Energy would soon conclude the process of realignment and commence the process of legislative consolidation of the Gas Master Plan into a Gas Act.
This is an important requirement for development of Ghana into a petrochemical hub in the sun-region.
Government recognizes that there are some regulatory challenges that must be addressed to provide regulatory certainty and predictability in the downstream natural gas market. The proposed Gas Act will provide an enabling environment and appropriate incentives for investors that are willing to invest in Ghana.
Second, I also want to assure investors that security of natural gas supply as feedstock for petrochemical plants is a priority for our Government. Procurement of natural gas from domestic sources has already been secured under regulations governing the Domestic Supply Obligations of Upstream gas producers.
Distinguished invited guests, we are not only focusing on gas. It is my pleasure therefore to invite you all especially the private sector; to take advantage of the favorable petroleum market environment and invest in infrastructure such as oil jetties, pipeline and distribution infrastructure, refineries, gas processing plants, storage and loading gantries, among others.
For us as a country our vision for the petroleum downstream industry is to ensure that Ghana becomes a key player in the downstream petroleum industry in the West African Sub region.
To this end, Government is also working on a Petroleum Transportation Infrastructure Masterplan, aimed at enhancing the pace of infrastructure sourcing with a regional context in mind. This will facilitate the development of alternative transportation infrastructure for petroleum products; such as railway lines, pipelines, and river barges; to major demand centres across the country.
This infrastructure developments will also link Ghana with our sub-Regional markets and further deepen our regional integration agenda as well as fulfil the objectives of the African Continental Free Trade Agreement.
Ladies and Gentlemen, the Ministerial Committee working on this Master Plan has finalized its work and ready to present its findings to the Economic Management Team and consequently to the Cabinet for consideration to allow for the commencement of the first phase of new pipeline infrastructure projects to complement existing infrastructure; and thereby ease the movement of petroleum products from Tema through Akosombo, to Dabire, Buipe, and Bolga.
Our unique geographical position, democratic stability and security require that we provide leadership in building an integrated infrastructure to serve the Sub-Regional petroleum industry.
We have to increasingly leverage on the digital technologies that are available to increase efficiency in the downstream petroleum sector. One of the areas that we have been discussing and taking a decision on is for example the distribution of premix fuel in Ghana amongst the fishermen.
This is an area that has really been a challenging one because there are subsidies to premix food, and whenever there are subsidies, the distribution of the product tends to create rents, and when it creates rains all sorts of people come in the middle and the fishermen who this is designed for ultimately don't even get the product because the products are smuggled to other people who may not even be fishermen.
So we've been looking at this issue and we have decided that the best way to deal with this is to digitise the process so that we can be able to direct the subsidy to each boat that is registered. We’ve registered all the boats. We had this meeting yesterday to look at where we are, and we’ve given the whole team 4 weeks to finalise it. And then we will implement a digitisation process in the distribution of premix in Ghana, and we hope to extend it also to fertilizer in the next year as well.
Public Safety and Consumer Interests
Ladies and Gentlemen, Ghanaians are still reeling from the fatal experiences of gas explosion and other incidences in recent years. The human tragedy cannot be lost on us. Let me assure the good people of Ghana that government will continue to develop and implement policies that protect the safety and interest of the general public.
One of such policies is the National Liquefied Petroleum Gas promotion policy which seeks to ensure that at least 50% of Ghanaians have access to safe, environmentally friendly and affordable LPG for commercial, industrial and domestic use by 2030. Let us intensify public safety campaign.
This is one of many policies geared towards the direct achievement of Ghana’s commitments under the United Nations’ SDG 7 and 13. I am happy to note that significant progress has been made towards implementation and a pilot implementation will soon be rolled out.
Mr. Chairman, ladies and gentlemen; this conference offers an excellent platform for key stakeholders across the Sub-Region, to harmonize policies, and opportunities to allow the industry to respond to global developments and trends consistent with member countries’ interests.
And I have unshaken belief that the petroleum industry will continue to be the anchor for the transformation of our countries.
Mr. Chairman, once again I thank the organizers for the excellent organization. To you Distinguished ladies and gentlemen, I thank you for participating in this gathering of downstream industry experts, business leaders and stakeholders.
With these few words, I formally declare the 2019 Ghana International Petroleum Conference (GhIPCon) duly opened.