While they admit it is subject to further audit, Bulk Oil Distribution Companies estimate government’s indebtedness to them has built up to some GH?2.1billion again, as the sum of different classes of debt.

“The BDCs are owed different profiles of debt; we have the price under-recoveries and we have the Forex exchange under-recoveries. We also have the Real Value Factor (RVF), which is the financing cost that BDCs incur for bearing the price under-recoveries,” Senyo Hossi -- lobbyist for the BDCs, told the B&FT.

“It is not the case that government’s indebtedness to the BDCs has been totally dealt with. The [National Petroleum Authority] NPA itself admits that the debt has not been fully paid; they were referring to a particular class of debt,” Senyo Hossi said in response to reports that suggested in February government had cleared the arrears.

NPA boss Moses Asaga said in February that GH¢412million had been paid to the BDCs, which represented all outstanding debts as of January 31, 2015.

Senyo Hossi indicated, however, that while significant revenue has been accrued due to the fall in crude oil prices to settle the price under-recoveries, the bigger debt profile which is the FX under-recoveries and the RVF are yet to be settled.

“The price under-recovery is very simple: I have a US$100 contract; you say I should sell it at 3.0 instead of 3.5. Now instead of selling it at 3.5 which is the dollar price I would actually pay, it means at that point I am making an FX under-recovery or forex exchange loss. But even at 3.0 Ghana may say it is too much, so sell it at 2.8 and I will give you the remaining 0.2. That is the price under-recovery -- a further suppression of pricing after the exchange rate has been suppressed,” he explained.

On the forex exchange side, Senyo Hossi estimates that an outstanding amount of US$515million remains to be settled by government while an estimated amount of GH?250million remains to be settled on the RVF side, covering the periods 2011 and 2014.

Mounting debt owed the oil importers has become an albatross around government’s neck, and frantic measures to extricate itself have yet to yield maximum benefits; when crude oil prices fell by about half on the world market, Ghanaians enjoyed only an accumulated 12 percent reduction in prices at the pump as government tried to save to settle its indebtedness.

The Finance Minister, Seth Terpker, also indicated during his March 12 statement to parliament on the implications of falling crude oil prices to the economy that government will no longer entertain claims for forex losses.

While agreeing that the Finance Minister’s move could lead to market liberalisation, Senyo Hossi said it cannot be done in isolation and that government will have to stop intervening in pricing.

“I can understand the Finance Minister any day; he does not want to wake up every morning to find one kind of liability or another staring in his face. It is absolutely understandable, but it cannot be done in isolation; it is a function of the pricing mechanism; it is a function of the FX supply model that is also largely dependent on the Bank of Ghana, and all these things must be put together so we come to a position,” he said.

“All this tells me is that progressively we are all gravitating toward a price-liberalised environment, wherein government has no responsibilities or liabilities regarding pricing and the markets determine how pricing should work; and competition should drive what prices will be out there at the pumps. We should be ready for it.”