TOR Crisis • Government Intervenes

Dr Kwabena Duffuor - Minister of Finance and Economic Planning,

A four-man team comprising the Chief of Staff, two ministers and the Governor of the Bank of Ghana, has been set up to rescue the Tema Oil Refinery (TOR) from its huge indebtedness and ensure regular supply of crude to the refinery.

Mr John Martey Newman, Chief of Staff, and Dr Paul Acquah, Governor of the central bank, would work with Dr Kwabena Duffuor, the Minister of Finance and Economic Planning, and the Energy Minister, Dr Joe Oteng-Adjei, in restoring the balance sheet of TOR in order to reduce its huge debt, as well as managing its crude oil supply.

Over the past four months, TOR has been facing some serious challenges with respect to financial capacity and procurement of crude oil in addition to internal agitation from its work force.

Speaking to the Daily Graphic, the acting Chief Executive of TOR, Dr Kwame Ampofo, admitted that the refinery was indebted to the Ghana Commercial Bank (GCB) alone to the tune of GH¢900 million, rendering it impossible now for the refinery to establish new letters of credit to procure crude oil.

The chief executive was reacting to concerns raised by some TOR workers about management’s inability to import crude oil since the beginning of the year, thus allowing major suppliers to procure finished products at exorbitant prices for the refinery.

He said the debt portfolio, which some financial analysts said could cripple the largest commercial bank in the country, was the main challenge confronting the company.

And to address the urgency of the situation, Energy Minister, Dr Joe Oteng-Adjei, told the Daily Graphic that the presidential team, set up two weeks ago to salvage TOR from its predicament, had held talks with officials of TOR and GCB to discuss how the refinery could clear its indebtedness to GCB without derailing its (TOR's) normal function.

He said with respect to the financial challenge, the team was holding discussions with two banks, whose names he preferred keeping close to his chest, 'because when you are in the process of negotiation, you don't want to mention names'.

Crude Oil Supply
On the regular supply of crude oil for TOR, Dr Oteng-Adjei said for now the team had three main options, namely, Nigeria, Libya and Venezuela, from where the product could be sourced.

He said the idea was to ensure that if one of them was unable to supply crude oil to TOR, the refinery could always fall on the others for supply, thereby reducing the probability of non-availability of crude oil.

Inaugurating the board of TOR last June, the Energy Minister expressed concern about inefficiencies within the company, citing them as partly responsible for its high indebtedness.

The minister also expressed concern about the high rate of theft at TOR in spite of the presence of security personnel and close-circuit television cameras (CCTVs).

However, responding to a question on how the issue had been or was being addressed, Dr Oteng-Adjei said, 'Once we clear the policy issue, we can sit back to look at the inefficiencies.'

Workers of TOR had also raised concerns about a pending policy to lay some of them off due to the challenges facing the refinery and which they claimed had led to the shutdown of the refinery’s plants for the past four months.

But Dr Ampofo said all procurement was being done in accordance with the country’s procurement laws and added that documents to that effect existed, though he did not make them readily available.

The workers had maintained that as a result of the company’s inability to import crude oil, a loss of $300,000 a day is incurred at TOR following the shutdown of the Residual Fluid Catalytic Cracker (RFCC) Plant.

But Dr Ampofo dismissed those claims saying they were mere fabrications. He also denied that the RFCC plant was not working.

He explained that the debt rose steeply when the plant developed a fault in February and was shut down for four months to allow for maintenance works and said the plant had been in operation since June following the completion of maintenance works.

Sitting Allowance
The workers also hinted that five key technical personnel at the RFCC and the Crude Distillation Unit (CDU) departments had so far resigned and left for refineries in Vietnam and Oman. They also accused the TOR board of financially overburdening the company by sitting too frequently since its inauguration in June this year to take big sitting allowances in addition to fuel allocations.

On the sitting allowances for board members, the chief executive admitted that they were paid GH¢520 per sitting as stated by the workers but added that the rates were fixed by the old board.

“Since we came we have not done any adjustments to the figures and I have not received any allowance myself since assuming office in June,” he added.

When asked on the purchase of crude oil for TOR by agents in small quantities, Dr Ampofo admitted the claim but was quick to explain that since the quantities delivered by the agents were small, they were usually stored in tanks until the volumes became bigger and then later refined.

He explained that if small quantities of crude oil were refined, it strained the plant.

As regards salary negotiations, he said they had not stalled as was being alleged, adding that they were suspended because the local union wanted some information from the government, which was yet to be delivered. As soon as that information was made available, the negotiations would resume.

Dr Ampofo said the refinery was failing in its bid to establish letters of credit to procure crude oil because of the huge debts it owed to the Ghana Commercial Bank, adding that current indebtedness to the bank stood at about GH¢900 million or one trillion old cedis.

He said all procurement was being done in accordance with the country’s procurement laws and added that documents to that effect existed.

Further investigations revealed that the refinery was also gripped with the award of contracts without adhering to the procurement laws out of which a total of $15million has been paid in instalment through Barclays Bank Ghana with the fifth and sixth progress payments effected on July 14, 2008 to account number 00919, resource asset management, Canadian Imperial Bank of Commerce, Calgary, Alberta although work on the project has halted for the past eight months following the claim by the contractor, Mr John Edward, that he had not received payment and therefore needed more funding from TOR management to help him complete the project.

Further investigations also revealed that a steam generator which is also to be installed for which a stand has been mounted is currently in the United States of America whilst the contractor is demanding $55,000 from TOR as shipment costs to help transport down the generator for installation.

Author: Kofi Yeboah
& Della Russel Ocloo