Out of the 30 licensed bulk oil distribution companies (BDCs) in the country, seven of them control 70.6 per cent of the business, while the remaining 23 companies share less than 30 per cent of the market.
Except GO Energy, which entered the market last year, the seven BDCs, comprising Fueltrade, Ebony, Chase Petroleum, Vihma, Cirrus and Juwel Energy, have dominated the oil storage business since 2010.
Data from the industry regulator, the National Petroleum Authority (NPA), showed that as a result of the dominance of these companies in the industry, some of the new entrants have been existing without business, raising questions over what they actually do in the market.
The authority's 2014 BDCs Performance Statistics showed that of the 29 BDCs in that year, all, except Nations Services, undertook one business or another to earn some market share.
It was as of September last year that Nations Services managed to supply about 17.61 million litres of gas oil and premium petrol to secure 0.55 per cent share within the period.
Meanwhile, Redfins Energy, XF Petroleum & Engineers and Rhema Energy were unable to supply products within the first nine months of last year and as a result, earned zero market shares.
Growth of companies
Over the years, fuel supply segment of the downstream sector has witnessed dramatic transformation, with new entrants soaring competition and raising the stakes for existing ones.
A detailed analysis of the annual statistics from the NPA showed that between 2009 and September, last year, the number of BDCs increased by 900 per cent, from three companies to 30.
By 2010, 10 companies supplied petroleum products to the various oil marketing companies (OMCs) and other strategic customers such as the Volta Aluminium Company (VALCO) and National Security. The number, however, rose to 16 in 2012, 19 in 2013 and 29 in 2014, as the NPA continued to license more BDCs to operate in the market.
The decision to allow for more companies into the market was to allow for competition, with the hope that it will enhance efficiency, promote good business and drive down prices, the Director of Public Relations at the authority, Mr Yaro Kasambata, said in an interview.
Should more companies apply for licensing, Mr Kasambata said the NPA would not hesitate to grant their request provided they met the requirements.
History of BDCs
Until 2005, bulk oil distribution was mainly the preserve of the state-owned Tema Oil Refinery (TOR). The refinery refined enough products for retail to the OMCs.
Additionally, the Ghana National Petroleum Corporation (GNPC) and the Bulk Oil Storage and Transportation Company (BOST) doubled into the oil supply business, albeit periodically and in minimal quantities.
However, following the liberalisation of the downstream sector, private expertise was allowed into the oil business, paving the way for veteran BDCs such as Chase Petroleum, Cirrus and Fueltrade to participate in the business.
The injection of private expertise into the oil supply business brought in its wake efficiency, choice for consumers and price reductions, which altogether smoothed the difficulties that were associated with state control.
Since then, the NPA has continued to license more companies into the sector and that has weakened the market share of the pioneers while providing more options for consumers. — GB