In Ghana, the National Petroleum Authority (NPA) is the sole government agency that has the mandate to grant licenses and regulate the activities of companies that distribute and export petroleum products.
There are thirty-three (33) bulk-distributing companies (BDC) in Ghana. These companies have the license from the NPA to do bulk distribution. They also import crude oil, procure, store, distribute and sell petroleum products particularly to Bulk consumers. Additionally, the BDCs supply their products to Oil Marketing Companies who retail nationwide.
Some of the major BDCs in Ghana include Fuel Trade, Cirrus, Chase, Vihama, Springfield, Ebony, Tema Oil Refinery, Oil Channel, Dominion, Alfa Petro, Peace, Blue Ocean and First deep water.
Who Can Secure a Bulk Distributing Company license?
In Ghana to be able to acquire a BDC license, one must be:
- A citizen of Ghana; or
- A body corporate registered under the Companies Code, 1963 (Act 179); or
- A partnership registered under the Incorporated Private Partnerships Act, 1962 (Act 152); or
- A foreign individual or foreign company in a registered joint venture relationship with a citizen of Ghana or a Ghanaian company. (50% Owned by Ghanaian)
Requirements to Obtain a Bulk Distributing Company license
To acquire a BDC license, submit the following relevant documents to the NPA for consideration:
- A detailed Business Plan.
- A corporate environmental policy culminating in the grant and issue of an environmental permit by the EPA.
- Minimum equity capital requirement of GH¢ 30 million. The combination of the following will prove the equity capital requirement:
- Cash or cash equivalents (e.g. government bonds, treasury bills etc.) lodged at the Bank of Ghana serving as equity capital.
- Equity stake in an industry relevant fixed asset (e.g. storage depot, port infrastructure etc.). The NPA will appoint an independent accounting firm to prove the equity capital requirement
- The minimum capital must be held and owned by the applicant (not its shareholders, affiliates, subsidiaries or ultimate beneficiaries).
- A minimum trade facility equivalent to US$ 60 million. Please note that new applicants will be required to submit evidence in writing from a reputable bank or banks licensed by the Bank of Ghana and in good standing in support of their application stating their willingness to provide funding not less than US$ 60 million or its Ghana Cedi equivalent to the applicant.
- Infrastructure Requirement: (Minimum of 40,000 m3 of storage facilities).
- This should be the company’s owned-storage facility or a lease of a dedicated storage facility from an entity other than BOST. Such leased storage facility must not be shared with third parties.
- In the case of a lease, the Company (Lessee) would be required to procure a dedicated storage capacity of 40,000m3 on a minimum five-year term before a BDC license will be issued. The license will be renewed on condition that the lessee has a valid lease agreement, among others, in line with the lease period stated above at all times.
- In the case of a company intending to have its own storage facility, the company must apply for and obtain a permit to construct a depot for the storage of petroleum products, where applicable.
- Ownership of a storage depot could be secured through equity participation in a joint venture agreement. In this regard, a BDC can acquire ownership of a storage depot through equity participation in a joint venture agreement. For the grant and issue of the license, the BDC’s equity interest must meet the minimum 40,000 m3 storage capacity.
6. Evidence of local partnership i.e. at least 51% shares to be held by Ghanaian citizens.
Subject to the fulfilment of all other requirements, an ‘Intent To License’ shall be issued by the Board to the applicant who shall have up to 30 calendar days to submit an executed credit facility letter from their indicated banks in fulfilment of the licensing requirements, failing which the ‘Intent to License’ shall be withdrawn. Upon receipt of all credit facilities, the NPA shall evaluate their terms and conditions to establish its suitability and functionality.
Requirements from Other Stakeholders after Obtaining a Bulk Distributing Company license
Installation of the front-end of the GCNet in the offices of the respective applicant and subsequent declaration of all petroleum imports and exports to customs through the Ghana Customs Management System/Ghana Customs Network (GCMS/GCNet) prior to the delivery of the cargoes.
Issuance of License
The NPA board shall within thirty days of the receipt of an application, acknowledge receipt and inform the applicant in writing of the decision of the board. The NPA will issue the BDC license ones an applicant has met all the preconditions including the payment of the prescribed fee.
Cost Of registration
It is important to note that for new entrants, the fee for acquiring a BDC license is USD 750, 000.00 and a processing fee of USD 37, 500.00.
Renewal of License
The BDC license has to be renewed annually. Companies who seek to renew their licenses would have to pay USD 400,000.00. Sixty days prior to its expiry, an application for renewal has to be made to the NPA board.
In Ghana, there is a constant increase in demand of petroleum products, which is likely to move upwards due to economic development. This means that there is an opportunity for new entrants into the industry that will engage in the bulk distribution of petroleum products in Ghana to meet the growing demands of the population.