Ghana could be hit with severe fuel shortages in the coming days if the government fails to act quickly to ensure the availability of forex for bulk oil distribution companies for oil import.
This warning is coming from Mr. Alexander K. Mould, a former Chief Executive Officer of the National Petroleum Authority.
Some fuel retail outlets in the capital, Accra, were out of supply.
In a statement issued Friday, Alexander K Mould, a financial analyst and energy expert, noted that banks in the West African nation are reporting a shortage of FX to meet payments of maturing Letters of Credit (LCs) issued to international oil trading companies such as BP, Vitol and Trafigura.
This, he said, was due to the Bank of Ghana’s (BoG’s) inability to meet requirements at the various FX auctions.
“Some banks have even stopped quoting FX rates as there is simply no availability for the quantities required by the fuel importers (BDCs).
“This is causing BDCs to max out their credit-line limits with their banks, and the implication is that the banks will no longer have credit lines available for the BDCs to import fuel going forward.”
Mr. Mould further noted that banks also are running the risk of maxing out their credit lines with their corresponding foreign banks that confirm (or guarantee) the local banks’ trade instruments such as Documentary LCs and Standby LCs (aka Guarantees).
He said the situation could prove very disastrous for the country as essential imports could come to a grinding halt.
“Government needs to act decisively and quickly before International Banks’ Credit and Country Risk teams start reviewing their limits to Ghana downwards, if they have not already done so (since S&Ps recent downgrade – the last of the three major rating agencies to do so); Such actions by the Corresponding International Banks will cause a Forex credit crunch resulting in an even faster depreciating Cedi.
“The Government of Ghana must accelerate its discussions with the IMF to allow a bridge-programme to be put in place before the main Take-Out Programme kicks in sometime in Q1 2023 as reported,” he concluded.
Meanwhile, a source within the bulk oil importers has told energynewsafrica.com that the forex is having a grave impact on them than they expected.