Choicenewsonline Your Choice Is Here
The lease negotiation between Tema Oil Refinery (TOR) and Torentco Asset Management Limited (TAML) is the best proposal on the table within the short to medium term, Executive Director of the Institute for Energy Policies and Research, (INSTEPR) Mr Kwadwo N. Poku , has said.
Mr Poku who is also an energy expert further stated that for a refinery that is making monthly losses, the BOD and government approved the following proposal from Torentco, TAML will pay TOR $1.067 million monthly ($12.8 million yearly) to cover monthly operating expenses (staff renumeration, taxes, statutory debts etc).
It will also pay the yearly insurance of the refinery $6 million and will further make a one-time payment of $22 million to improve and fix the refinery, also $2.5 million to workers Provident Fund.
In addition, the company will pay an annual ground-rent of $1 million in advance for each year and also will reserve 40 UScent per barrel of oil processed for maintenance of the plant (estimated at $3.2 million) as well as assume the utility cost estimated at USD $200,000 every month.”
With this proposal to lease the refinery, Mr Poku said, TOR will still retain it’s current yearly revenue from GPMS dividend estimated at $9 million, Right of way revenue of $2.13 million and laboratory $663,000.
This will give TOR a total revenue of $11.793 plus the above payments from TAML.
“The refinery will move from a loss-making company to a net positive cashflow of $14.79 million a year while all their bills and financial obligations fully paid. Over the 6-year lease period TOR will receive a total cashflow of $88.7 million with all GRA , ECG, Workers renumeration, Ghana water paid. Plus the one time payment of $22.5 million before the lease contract starts.
“TAML in turn will assume the responsibility of importing 8 million barrels of crude oil a year to be refined at the refinery and the sale of the refined products. Whether TAML makes a loss or profit in their refining and trade of products is not the concern of the Government or TOR. This proposal was envisaged as a stop gap measure to keep the refinery running for the next 6 years while government looks for a permanent solution.
“TAML proposed and agreed that during the 6-year lease, government can terminate the agreement if they find an investment proposal which is long term and better terms than what they proposed.
“INSTEPR is of the view that this proposal is the best proposal on the table within the short to medium term. The government has not stopped any company from expressing interest and to that effect we have sighted a letter dated 18th April 2023 from the Office of the President, asking the Ministry of Energy and TOR to engage a company called Legacy Capital from Dubai.
“We always say we want to build Ghanaian wealth and business but the minute a company from Ghana expresses interest in doing a transaction, all hell breaks loose. You will hear ‘he is politically connected, he does not have the capacity, friends with the president’s family’ etc.
“Meanwhile, if you check the history and competence of all these companies registered in Dubai, they are empty as well but I guess in Ghana we ask less questions when it’s the white man or the Arab.
“The government does not have the $100 million needed to revamp TOR or sovereign guarantee to be given to any company to bring crude oil to TOR. So with the current discussion, we must as well shut down the refinery and all workers look for other jobs. As the refinery stands, it has negative cashflow so any transaction that will bring about positive cashflow is welcoming news,” he said in a statement on Friday, June 23.
