... Case of Robbing Peter to Pay Paul? Accra, Jan 17 (Graphic) -- The Tema Oil Refinery (TOR) has secured a $170 million syndicated loan to pay off the debt it owed Samsung Corporation of Korea for setting up the Residual Fluidised Catalytic Cracking (RFCC) Plant. Consequently, TOR has finished paying the remaining $145 million debt it owed Samsung Corporation. The $230 million plant, which was commissioned by the President in October, 2002 and described as “cash cow” by the Managing Director of TOR, Dr K. K. Sarpong, has the capacity to convert 14,000 barrels of low value residue from the existing plant at the TOR. In an interview in Accra at the weekend, Dr Sarpong said the syndicated banks had offered a better deal and that prompted TOR to go in for the loan to pay the balance it owed Samsung Corporation. He explained that the remaining part of the loan would be used to upgrade facilities at the refinery to maximise production. The MD stated that,“The deal was oversubscribed from the $170 million originally sought and as a result,participating banks in the loan had to be scaled back due to the level of appetite displayed in the market.” The financiers of the loan were Standard Chartered Bank & Vitol S. A.,lead arrangers,BNP Paribas,joint arranger with senior co-arrangers being Calyon,Erste Bank de oesterreichischen Sparkassen AG,The Royal Bank of Scotland plc and Sumitomo Mitsui Banking Corporation Europe Limited. The lead managers of the bank were Barclays Bank Plc and DekaBank Deutsche Girozentrale with the Ghana International Bank plc serving as the manager while Linklaters acted as Legal advisor to the lenders.He said “The facility has been fully underwritten by the Mandated Lead Arrangers and will be fully secured at all times by the assignment of an offtake contract from Vitol S. A. who have for many years had an extensive and successful relationship with the Tema Oil Refinery.”
Dr Sarpong emphasised that TOR was the sole crude oil refinery and the main supplier of petroleum products in Ghana and hence,was of strategic importance to the Ghanaian economy.Throwing more light on the operations, he said RFCC's operations was being maximised to ensure its maximum utilisation.
The RFCC can convert the residue from the old plant to Liquefied Petroluem Products (LPG) and gasoline. TOR is currently exporting LPG to Burkina Faso, the largest importer, Benin, Togo, Mali and Niger.Dr Sarpong stated that the “RFCC was our 'cash cow' and without that we will face problems. We, therefore, have to ensure that its operation is run smoothly.”
He explained that the residue from the old plant was not enough to feed the RFCC and for that matter, the TOR had begun importing more residue to feed the plant to ensure maximum utilisation on sustainable basis, adding “Our profitability is more sensitive to capacity utilisation than crude prices.”