TOR rules out immediate removal of refinery margin citing debt burden
The Tema Oil Refinery (TOR) has ruled out the immediate removal of the refinery margin, citing its significant debt burden and ongoing financial recovery efforts.
Mr Nayon Bilijo, Board Chairperson of TOR, said this on Wednesday at the 18th Annual General Meeting of the state-owned refinery.
He explained that although the refinery had made some gains in recent operations, its current financial position did not support calls for the elimination of the margin.
“As of now, it doesn't necessitate that decision,” he stated in response to concerns about whether the refinery margin should be scrapped.
The refinery margin, which forms part of petroleum pricing regulated by the National Petroleum Authority, has been the subject of public debate, particularly in the context of rising fuel prices.
Mr Bilijo explained that TOR continued to grapple with substantial legacy debts accumulated over the years, which required steady revenue streams, including the refinery margin, to be addressed.
“We should remember that the debts that are sitting on our books now are not the doing of the current board and management. They are legacy debts, which means that we inherited them,” he said.
Mr Bilijo emphasised that the margin had been deliberately introduced to help service such obligations, making its removal premature under current conditions.
“They were especially set up for that, so we need to continue with the margins until those debts are all cleared,” he said.
Mr Bilijo also noted that while TOR had begun a recovery process, its balance sheet remained under pressure, largely due to accumulated liabilities.
He said clearing the legacy obligations would allow the refinery to achieve its goal of becoming a self-financing state-owned enterprise capable of sustaining profitability.
“For government not only to be happy that TOR has been turned around, but to look into it… the balance sheet is not healthy,” he stated, urging efforts to address the outstanding debts.
Mr Edmond Kombat, Managing Director of TOR, also underscored the impact of debt pressures on the refinery's operations, noting that accumulated liabilities continued to weigh on the company's financial performance.
He disclosed that TOR inherited debts running into hundreds of millions of dollars, including obligations to crude suppliers and other entities, which continued to accrue interest over time.
“These debts are attracting interest and it keeps accumulating on our books. If they are not resolved, it has the potential to distort the current momentum and the gains that we are making,” he said.
Mr Kombat expressed support for ongoing government efforts to address the debt situation, indicating that relieving the refinery of such liabilities would significantly improve its financial outlook and operational efficiency.
GNA