Energy Think Tank, African Centre for Energy Policy (ACEP), has proposed a two-way approach to turn around Ghana’s debt-ridden premier refinery, Tema Oil Refinery (TOR).
The 45,000 barrels per stream day (BPSD) refinery constructed by the Italian oil and gas major, Eni, during the regime of the West African nation’s first leader, the late Dr Kwame Nkrumah, is currently having a cumulative outstanding debt portfolio of over GHc5.5 billion.
This comprises GHc2.8 billion with ESLA Plc and GHc2.3 billion in the company’s books.
This is despite many efforts at paying down the debt and raising loans to retool the operations of TOR over the years, according to ACEP.
In a document titled “Plugging The Two Decade Leak Strategic Options for the sustainability of Tema Oil Refinery” and presented by Kodzo Yaotse, Policy lead, petroleum and conventional energy, ACEP said it appears that Ghana is holding on to a company that generates no value to the taxpayer.
ACEP identified political inference, operational inefficiencies and inadequate investments as the major causes of the poor state of the country’s only refinery.
Citing political interference as breaking down corporate governance in TOR, ACEP observed that this has resulted in overstaffing of the refinery from 350 in 2003 to 950 including 350 contract staff as of 2020.
“At the same time, the company’s output has reduced from 45,000 bpsd to about 25,000 bpsd. TOR’s staff strength is comparable to refineries with capacities of about a 2.2million BPD. The high level of overstaffing increases operational and administrative costs, which contribute to the company’s annual losses over the period. Beyond the numbers, the quality of recruitments is also a significant concern. Recruitment as a political reward has, over the years, descended from the top management to lover levels, creating political groupings in the business environment and breeding internal saboteurs to the success of the company,” ACEP observed.
The West African nation’s premier refinery was recently in the news after the three-member Interim Management Committee (IMC) interdicted fourteen top management executives for various acts which they deemed have caused financial loss to the company and by extension the state.
The ICM was constituted after the Managing Director of the refinery, Francis Boateng, and his deputy, Ato Morrison, were relieved of their posts in June.
To address the current situation at TOR, ACEP recommended an appointment of a new Managing Director with industry experience who can show strategic pathway profitability and the repayment of the existing debts and be held strictly accountable to an agreed set of key performance indicators (KPIs).
ACEP wants the management of the refinery to be given free hand to restructure the company including staff strength, to an optimal level that leads to profitability.
ACEP’s second approach to addressing TOR’s challenges was for the government to consider privatising the state refinery.
This option, according to ACEP, is the most suitable given the uncertainties around political behaviour associated with a change in governments.
“Privatisation provides the opportunity to offset some of the debt and free debt accumulation to allow ESLA to address the existing debt situation,” ACEP said.
Source: https://energynewsafrica.com