An audit of GH¢1.8 billion claims submitted by the Bulk Oil Distribution Companies (BDCs) has stalled because the local banks that finance the BDCs are not co-operating.
Ernst and Young, an audit firm, was contracted by the Ministry of Finance in the second week of June 2014 to audit the claims of the BDCs before payment.
The government, on June 27, 2014, released GH¢450 million to cover part of its indebtedness to the BDCs, while it awaited the final audit report to settle the balance.
Ernst and Young was expected to submit its report by the end of July 2014, but has asked for extension because it had not received the needed data from the banks to conduct the audit.
“Our members have largely co-operated with the audit firm and we hope to have received the draft report by now. We have had meetings with Ernst and Young and the government, and all indications suggest that data required from the banks seem to be lacking. This is hampering the completion of the entire audit exercise,” the Chief Executive Officer (CEO) of the Ghana Chamber of Bulk Oil Distributors (CBOD), Mr Senyo Hosi, told the Daily Graphic in Accra.
The BDCs are usually pre-financed by the banks to purchase petroleum products for onward distribution to the market.
“Information from the banks is critical,” Mr Hosi noted and, accordingly, urged the banks to, “as a matter of urgency, give Ernst and Young absolute co-operation.”
“Our doors are open for the facilitation of the audit. As it stands now, the longer we delay, the worse the liquidity crisis and challenges would get and the less likely it would be for the BDCs to sustain their mandate of ensuring regular product supply onto the market,” Mr Hosi noted.
Essence of audit
Justifying the need for the audit, Mr Hosi explained that part of the loss had to do with the time the Bank of Ghana (BoG) provided dollars from the existing conventional arrangement.
“The longer it takes, the higher the loss, so it is important the audit process confirms the days that BDCs report they receive the dollars from the BoG and the audit also confirms the dates the BoG made the dollars available to the banks.
“If that is not reconciled, it is possible there may have been some misreporting on the part of any of the parties,” Mr Hosi pointed out.
Based on these possibilities, Mr Hosi stressed the need for the audit to take place successfully in order “to do away with any doubts”,
“The audit exercise is very important and must be supported by all to bring about a final legitimate claim,” he added.
Cause of debt
The government’s indebtedness to the BDCs is as a result of forex losses due to the depreciation of the cedi.
It did not pass on the loss to the consumer through forex subsidy, which, in the end, piled up the debt from June 2011 to December 2013.
Long queues were recorded in almost all fuel dumps across the country in the last week of June and the first week of July, 2014, as a result of the refusal of international suppliers to release fuel products onto the market.
Seven out of 10 banks have since the beginning of July 2014 withdrawn financing for oil transactions.
The government currently owes the BDCs more than GH¢1.3 billion, being subsidies on petroleum products,which the BDCs need to clear their indebledness to the banks.