Accra, Jan. 5, GNA - The Ghana Cylinder Manufacturing Company (GCMC), a wholly-Government owned entity, is on the verge of bankruptcy if a memorandum of understanding currently before Cabinet was not speeded up for the Company to be revamped, top officials of the Company said.
The Company, which has been living on the goodwill of some friendly institutions and has only one to three months of supply for operations, has not produced new cylinders since September 2005.
Weeks of investigations by the Ghana News Agency (GNA) Business Desk have revealed that the Company was under-capitalized from day one when it was set up by the then Ministry of Mines and Energy in 1998. The investigations also showed that in its current state, no bank or investor was ready to offer any lifeline that could bring back smiles onto the faces of the staff.
The Company requires three million dollars a year to place orders for materials for production, a setback that has confined the Company to only the refurbishing of old imported cylinders.
Nana Wiafe Ababio, the Managing Director of the Company, confirmed onward transmission to Parliament for action to be taken. He explained that if the Company was re-capitalized, its books would be clean and it would be in good stead to attract leading financial institutions for business to thrive and halt the importation of used and dangerous cylinders.
Another option, he said, was the introduction of a strategic investor willing to pump new funds into the Company. Nana Ababio said a conversion of the current liabilities of the Company into equity would make things easier, adding that this should have been done earlier to give the Company some reprieve. He described the Company's current plight as simply bad, especially with no materials to work with, except the refurbishment of clients' 10,000 cylinders.
The Company's main raw materials are imported steel and special chemicals.
Nana Ababio called for an immediate revolving line of credit for orders every six months with deferred Letters of Credit for 180 days. He explained that since the importation of used cylinders had been banned, it was imperative for the Government to make their local production a reality.
"The plain truth is that the used cylinders are not safe. Some come with gas in them and are leaking. This is not only dangerous but killing the industry as a whole."
Ghana has only two cylinder manufacturing companies, GCMC and Sigma One.
Nana Ababio said there were eight gas explosions countrywide last year and urged the Custom Excise and Preventive Service officials to collaborate to stop illegal importation of used gas cylinders.