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21 September 2016

Toxic diesel: BOST tops

senyo-hossiFollowing a global report which has uncovered that Ghana’s market is flooded with toxic diesel, The Finder can report that data from the National Petroleum Authority (NPA) has revealed that Bulk Oil Storage and Transport Company Limited (BOST), the state owned strategic reserve holder accounts for a significant 25% of total quantity of diesel imported into the country for the first six months of this year.

The remaining 75% was imported by 18 different Bulk Oil Distribution Companies (BDCs).

This means, on the average, each BDC imported a little over 4% of diesel in the first half of 2016, making BOST a major player in the market.

The role of BOST

BOST alone imported 221,292.30 metric tonnes of diesel representing 25% while the imports of 18 BDCs put together accounts for 660,108.92 metric tonnes, representing 75%.

In all, 881,401.22 metric tonnes of diesel were imported into the country in the first six months of this year.

The NPA data provides evidence that a state institution like BOST is playing a key role in the importation of the said ‘dirty diesel’ and, therefore, the situation cannot be blamed on only private sector players.

‘African quality’ diesel report

According to the report, Swiss commodity traders, Trafigura and Vitol, are among a number of companies accused of exporting what environmentalists call ‘African quality’ diesel, blending products in European facilities to create fuels with sulphur levels that are, sometimes, hundreds of times over European limits.

The report said more than two-thirds of the diesel samples (17 out of 25) had a sulphur level higher than 1,500 parts per million (ppm), which is 150 times the European limit of 10 ppm.

2,410ppm and 2,730 ppm in Ghana

Ghana Standards Authority approved sulphur content of 3,000 ppm, but the research found Ghana’s diesel products imported by Trafigura and Vitol to contain between 2,410 and 2,730 ppm, which is lower than the acceptable Ghana Standards Authority (GSA) limits but much higher than the 10ppm European standard.

TOR doing 1,000ppm (Diesel) and 500 ppm (Petrol)

The Finder can report that the Tema Oil Refinery (TOR), which refines sweet light crude, and collaborated with Ghana Standards Authority to set the 3,000ppm standard for Ghana, is doing 1,000ppm for diesel and 500ppm for petrol.

EU/USA 50ppm and 10ppm

In the European Union, the ‘Euro IV’ standard has applied since 2005, which specifies a maximum of 50ppm of sulfur in diesel fuel for most vehicles. Ultra-low-sulfur diesel with a maximum of 10 ppm of sulfur has been widely available as of 2008.

According to the report, the fuel imported into Ghana, mainly diesel, is seriously toxic sometimes to the extent that it is 2000 times worse than the standards accepted in the European Union (EU) and the United States of America (USA).

Dirty diesel in Ghana more expensive than clean diesel in USA

Following the uproar over the dirty diesel saga, suggestions are being made that Ghanaians would have to pay more if they want to enjoy the quality fuel used in the EU and the USA.

But the fact is that Ghanaians are already paying more for the dirty diesel than what those in the USA pay for clean diesel and, therefore, the argument that Ghanaians have to pay more than current prices to enjoy the clean diesel cannot be justified.

Light sweet crude at $43.63

As at yesterday, a barrel of light sweet crude on the New York Mercantile Exchange was selling at $43.63, yet consumers in Ghana now pay about GH¢16 per a gallon of diesel – which, clearly, is unreasonable.

On the other hand, in the United States of America (USA), a gallon of clean diesel is sold at $2.67, far lower than the over $4 Ghanaians are paying for the same commodity.

The price of a gallon of petrol in Pittsburg-Pennsylvania, one of the cities in US that pay higher for fuel was $2.39 as at yesterday while the price in Ghana is GH¢16 or equivalent of more than $4.

Clearly, Ghanaians are paying more for the dirty diesel because of the over 40% of taxes imposed on the product

The fuel price increase has imposed more hardship on the already suffering Ghanaian.

Senyo Hosi’s take

1. The Ghana Standard for sulphur content stands at 3000 parts per million (PPM).

This has been so since 2014 and considered acceptable by the Environmental Protection Agency (EPA) and the Ghana Standards Authority.

2. Standards stood at 10,000ppm and later 5,000ppm in 2007 when BDCs joined the supply chain.

3. BDC supplies have stood at about 2,000 – 2,200ppm and in some cases below 1,000ppm.

4. Per point 1 and 3, BDCs do not supply or import substandard products. In fact, BDCs supply products superior to the Ghana standards.

5. The European standard is superior to the Ghana standard with a 50ppm.

6. Standards are set by policy makers in ‘consultation’ with industry within the West African Region and including the Africa Refiners Association.

The standards are set acknowledging technological improvements and implications of regional logistics costs and local refinery capacity to meet specs and the consequential impact on refinery employment.

7. The NPA has since 2014 been championing efforts to move Ghana Standards to 500ppm.

B. Does the Ghanaian deserve better?

1. Absolutely, yes. Can European 50ppm spec be supplied to Ghana? Absolutely yes.

2. It is, however, expected to increase the logistical cost as the cost advantage in sharing logistics across West Africa will be lost.

This may be initially steep but temporal. The incremental cost may not exceed 10%. The cost will likely taper down as more countries follow suit.

 

Source: Thefinderonline.com

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