Government clears $1bn legacy debt owed Bulk Oil Distributors

Government has completed payments of all legacy debts owed the Chamber of Bulk Oil Distributors (CBOD), according to the Chamber’s CEO, Senyo Hosi.

A statement issued by the Chamber on Monday [February 10, 2020] said the government made payments to the tune of US$1 billion as of January 13, 2020.

According to the Bulk Oil Distributors, the debt which had accrued for four years; between July 2011 and July 2015, was estimated at US$1.43 billion.

But the BDCs agreed to a slash off US$432 million, leaving about US$1 billion to be cleared via an agreed payment plan with the government.

Breakdown of the debt cut agreed by BDCs and the government

Together with the interest, the amount that had accrued was however capped in March 2018, which means that beyond this point, no new amount was calculated on neither the actual amount nor interest.

The highest of the three components of the debt was the Forex Loss Under-Recovery (FLUR) which refers to the loss incurred by BDCs as a result of the differentials between the forex rates set by the National Petroleum Authority (NPA) for pump prices, and the rates at which FX rates were supplied by the Bank of Ghana on behalf of Government.

This component was US$806.25 million.

It was closely followed by Forex Loss Under-Recovery Interest (FLURI) which is the interest accrued on the delayed payments of forex loss under-recoveries; at US$99.67 million.

Also, the Real Value Factor which is the interest accrued on the delayed payments of price under-recoveries, stood at US$97.16 million.

The payments were done in three forms; cash, Bank of Ghana as well as Energy Sector Levy bonds.