Ghana Commercial Bank to finance upstream oil sector

The Ghana Commercial Bank (GCB) is to extend its participation in the oil industry to the midstream segment of the industry, the Managing Director of the bank, Mr Simon Dornoo, has indicated.

He said the bank would potentially extend its participation to the upstream segment of the industry with focus on financing businesses that provided services to companies engaged in the oil and gas exploration and production.

“These are exciting times and I see a change in economic fortunes of Ghana as a result of this find; it offers significant growth and diversification opportunities for GCB and we are re-positioning the bank to be able to take full advantage of this emergent sector”, he told the Daily Graphic.

The GCB has been playing a leading role in the country’s downstream sector over the years, financing about 80 per cent of crude oil and finished oil products imported by the Tema Oil Refinery (TOR).

“We are open to exploring this great busi­ness opportunity through strategic alliances where we can bring to bear our superior local knowledge and expertise gained over 57 years of operating in Ghana”, he noted.

Mr Dornoo said the Ghanaian banking sec­tor had seen significant growth over the last couple of years, pointing out that about 50 per cent of the 27 banks currently operating in the country were less than 10 years old.

He observed that competition in the sector had been keen but with the recent increase in minimum capital requirements from GH¢7million to GH¢60 million, “I see consolidation taking place”.

According to Mr Dornoo, one major chal­lenge facing banks in the country was access to medium to long-term funding, adding “High inflation and the lack of an institutional frame­work for mobilising long term capital are some of the reasons given for the death of long term funds”.

However, he said, with inflation now mov­ing into single digit and the promulgation of the Pension Act, which would enable the pen­sion fund industry to flourish, “there is some light at the end of the tunnel”.

Mr Dornoo expressed optimism that very soon, banks would be able to raise longer-term funding by issuing local currency bonds in order to meet their long-term funding requirements”.

Source: Daily Graphic

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