Wednesday, November 28, 2012

NDC collapses TOR in oil rich Ghana

nformation reaching the New Statesman indicates that Ghana’s only oil refinery, The Tema Oil Refinery (TOR), has virtually collapsed under the tenure of the ruling National Democratic Congress administration.
Since NDC government took over the reins of government in 2009, TOR has been virtually dormant except in 2010 when the company operated continuously on the back of regular crude oil supplied by the Ghana National Petroleum Company under a 1-year ‘processing’ or ‘tolling’agreement. However, since then, TOR’s plants have been operating at less than 30% of capacity in 2009, 2011 and 2012.
TOR’s virtual collapse has resulted in continuous year after year financial losses, massive brain drain of technical staff coupled with low morale and motivation among current TOR staff and management.
The New Statesman can confirm that the NDC government has pursued policies designed to ‘kill’ TOR – by promoting over 12 new private fuel importers, while denying tor the working capital it needs.
At the same time, the NDC government has refused outright to supply jubilee crude oil to TOR, with the baseless excuse that jubilee crude is not suitable for TOR. Meanwhile TOR’s assay tests have confirmed that TOR can easily handle and refine jubilee crude.
In this edition, the New Statesman will assess TOR’s current situation and the NDC’s failed promises regarding the revival of TOR.
TOR’s current situation
TOR is still buried under massive debt to the tune of some US$350 million and is unable to operate. The company owes this amount to twenty (20) creditors including: Banks (Ghana Commercial Bank and Barclays); Oil suppliers (Vitol, Glencore, Sahara, VRA, GNPC, NNPC); Utility companies (Electricity Company of Ghana & Ghana Water Company Limited); Contractors (GLOTEC, TSAKOS); Tax agencies (SSNIT and IRS); and other companies (Insurance and TOR provident fund)
Expensive spare parts ordered and delivered to the Tema ports since 2009 have not been cleared and have been left to the mercy of the weather.
Technical personnel with years of experience, who are critical to the operations of the refinery, have also left for Qatar, Cameroon, Equitorial Guinea, Dubai and Abu Dhabi. The New Statesman can confirm that over 20 key engineers and technicians left TOR since 2011. It is being reported that TOR’s board and management have now resorted to offering“bribes” to some key staff not to decamp to the Middle East refineries.
As though this was not enough, the government-to-government (g-to-g) crude oil agreement whereby the Nigerian National Petroleum Corporation (NNPC) supplies crude oil to TOR under concessionary terms has been in limbo since beginning 2011, as is the agreement with Equitorial guinea.
TOR has not issued audited accounts since 2008. Without proper financial accounts and a clear turnaround plan, TOR’s bankers are unable to provide working capital for tor’s sustained operations.
These problems have reduced TOR to a fuel storage depot where private importers store their fuel in return for a modest fee. These storage fees have become TOR’s only stable source of cash. As a result TOR is unable to meet salaries and other statutory payments, including payments to SSNIT, IRS and staff provident funds.
NDC government’s failed promises to TOR
The Mills/Mahama/Amissah Arthur government have not given adequate financial support to TOR. In 2010, the Ministry of Finance and Economic Planning paid a total of GH¢1.4 billion to Ghana Commercial Bank on TOR’s behalf. This was only a part of TOR’s debt, leaving a balance of about GH¢400 million payable to other creditors.
Beyond the payments to Ghana Commercial Bank, the NDC government has only given promises to TOR, but has not provided any additional funds.
In August 2011, then vice President John Mahama announced that the government of Ghana would provide $56 million to TOR immediately for retooling to improve its efficiency and performance.
In addition, the Minister of Finance, Dr. Kwabena Duffour, stated at the same meeting, that the TOR debt recovery levy had accumulated GH¢270 million as of August, 2011 which would be used as collateral to raise $200 million working capital for TOR.
As at today, 9th November 2012, the NDC government has failed to keep any of the above promises. Instead of taking bold and speedy actions to save tor, the NDC government continues to ‘dilly dally’, by launching endless consulting studies to find out how to save TOR.

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