The Bulk Oil Storage and Transportation Company Limited (BOST) has denied media reports that it is losing over GHC 7m by selling off-spec (substandard) products at a cheaper rate which would cost the nation.
The reports further said the off-spec product which is allegedly harmful to vehicle engines would be sold to the public via the various filling stations, a report BOST has vehemently denied.
BOST in a statement clarified the arrangements it had with Movenpiina – the company which is buying the off-spec products for purely industrial use.
According to BOST it considered all options available in selling off the product so as not to make losses hence its decision to agree with the Movenpiina (a company with a track record of diligently using such products) to acquire it.
Below is the full statement from BOST
BULK OIL STORAGE AND TRANSPORTATION COMPANY LIMITED (BOST)
Capacity/quantity of off-spec product sale
Bulk Oil Storage and Transportation Company Limited (BOST) – has the core mandate to ensure the provision of adequate fuel security and natural gas transmission through the development and maintenance of appropriate infrastructural network that would facilitate an efficient and cost effective transportation and distribution service to our clients and the people of Ghana.
It is upon this backdrop that BOST wishes to inform the good people of Ghana that, within best practices, off-spec is meant to be appropriately disposed off after knowing its cause since it cannot be used for its original purpose.
Yes! Within the legal right of the organisation, a volume of off-spec product to the tune of five million litres have been sold to Movenpiina. It is also important to note that, it rests on the decision of Management as to who to do business with.
And in this case, the financial ability, competence, space and the company’s (buyer) commitment not to put the product back unto the market should be duly ascertained. To this end, BOST deploys the use of only Bulk Road Vehicles (BRV) that have tracking devices installed and have dully met the requirements of NPA to haul products.
Thus rendering BOST extremely responsible. The transmission department at BOST duly inspected the premises of the off-taker (ZUPOIL LTD) and was convinced that their storage facility could accommodate the volume of product.
The product was declared off-spec after going through an in-house technical assessment and a laboratory test by the Tema Oil Refinery. Thus cannot be deemed as a scandalous transaction. After the realisation of the state of the product, BOST after a thorough analysis and consultation, had three (3) options to deal with the situation;
- Option 1
The first option is to have a corrective treatment of the off-spec product at TOR but this option was however not possible because TOR is not refining at the moment. - Option 2
The second option was to gradually inject a total of about seventy thousand (70,000) litres of the off-spec product into ten million litres (10,000,000) of normal product over a period which will take about ten (10) solid months for BOST to accomplish. The implication of this option is however the opportunity cost of losing the commercial value of over five million and seven hundred thousand Ghana Cedis (GHS 5,700,000). This arrangement would have deprived the BDCs of getting space to store their products. The capacity of the tank holding the off-spec product is twenty million litres (20,000,000 lts). - Option 3
This option involves the selling of the off-spec product at a competitive ex-depot price. Comparatively, the possible revenue loss here cannot outweigh the loss in Option 1 and 2.
Clearly, OPTION 3 was the ideal from a business point of view.
Details of transaction.
BOST sold the off-spec product at One cedi, thirty pesewas (1.30p) per litre as against the normal ex-depot rate of One Cedi, seventy –five pesewas (1.75p) for normal products. Thus 26 percent discount off the normal product and this is the normal and acceptable practice in the industry.
The assertion that, the off-spec product should have been sold at two cedis, fifty pesewas (2.50p) is misleading because ex-depot price and pump price are completely different. BOST only sells products at ex-depot rate.
Usage of Off-Spec Products on the open market.
BOST’s responsibility is to sell off-spec products to a qualified company and it is important to note that, off-spec products are used by the steel, garment, petro chemical companies to run their machinery and certainly not for the running of vehicle engines.
It can also be used as mixture for asphalt and turpentine to prevent decay of wood, etc and therefore cannot fanthom how possible off-spec products could be sold to unsuspecting consumers for whatever reason. That notwithstanding, it is a fact that, NPA is fully in control as usual and will not allow this to happen.
Facts to Appreciate
·BOST is soon to build and increase storage capacity of six (6) weeks to 12weeks.
· BOST is to construct a twelve thousand (12,000) metric tonne storage capacity of LPG to assist the industry of which the land has already been acquired.
·BOST has acquired flow metres and pumps to upgrade our facilities across the country to improve and optimize operational efficiencies.
· The organization is currently reviewing all signed contracts to ensure value for money in the quest to protect the national interest.
· BOST is creating the enabling environment to ensure BDCs operate more efficiently.
By Martin Asiedu-Dartey|3news.com|Ghana
Twitter: @NewsyMartin