Ghana’s plan to remove about US$120 million from the Tema Oil Refinery’s (TOR) legacy obligations could give the state-owned refinery additional room to rebuild its finances, but the relief will need to be matched by operational reforms if it is to translate into sustained domestic refining.
The proposed write-off, which TOR Managing Director Edmond Kombat said the Ministry of Finance intends to include in the 2026 Budget, forms part of a broader effort to reduce liabilities that have constrained the refinery for years.
Kombat disclosed the plan during a working engagement between TOR management and Parliament’s Energy Committee.
Financial Reset Targets Legacy Obligations
TOR’s legacy debt has already been reduced through an earlier restructuring, with outstanding obligations now estimated at about US$400 million.
The additional US$120 million write-off would represent a further reduction in the historical debt burden owed to the state.
“Currently, the Ministry of Finance is saying they are going to write off some of the debts owed to them. I think they are including it in this year’s budget. It’s about $120 million.”
Edmond Kombat, Managing Director, TOR
The proposed intervention is important because legacy debt has consequences beyond the size of TOR’s balance sheet.
A heavily indebted refinery can struggle to secure working capital, finance crude purchases and undertake the maintenance required to keep processing equipment available.
Debt servicing and accumulated obligations can also compete with expenditure needed to restore productive capacity.
Reducing the historical burden could therefore create greater financial space for operational priorities.
State And Private Claims Still Hang Over TOR
The proposed write-off, however, would not clear TOR’s entire liability position.
Kombat said the refinery continues to owe private creditors, including Sahara and BP, with management negotiating with the companies over possible discounts.
TOR also has outstanding obligations to state-owned GNPC and VRA.
Management is seeking parliamentary assistance to resolve those inter-state liabilities, potentially through arrangements that allow obligations between government-linked institutions to be offset.
“We also owe GNPC and VRA. Because they are state institutions, we will need your help as the Parliamentary Select Committee to help net it off.”
Edmond Kombat, Managing Director, TOR
Resolving those claims could further simplify TOR’s financial position, although any netting arrangement would also have implications for the balance sheets of the other state entities involved.
Debt Relief Cannot Replace Commercial Viability
The more consequential issue for Ghana’s petroleum sector is what TOR does with the financial breathing room.
Ghana remains heavily exposed to international petroleum markets, particularly when refined-product prices rise or exchange-rate movements increase the local cost of imports.
A functional domestic refinery can provide an additional source of refined products and potentially strengthen supply resilience.
But that advantage depends on TOR having reliable crude supply, sufficient working capital, dependable equipment and commercially viable operating economics.
Debt relief addresses only one part of that equation.
The refinery will still need to demonstrate that it can generate sufficient operating cash flow to meet its obligations without repeatedly accumulating new arrears.
Refinery Strategy Matters For Energy Security
The development comes as Ghana continues to seek greater value from its domestic petroleum infrastructure and reduce vulnerabilities within the downstream supply chain.
For TOR, that means moving beyond the question of how much historical debt can be removed and establishing a sustainable model for future operations.
The distinction is important. A government-funded debt clean-up can improve a balance sheet once; it cannot permanently compensate for inefficient operations, inadequate maintenance or insufficient working capital.
A successful restructuring would therefore need to connect financial relief with measurable improvements in refinery availability, crude procurement, operating efficiency and revenue generation.
The proposed US$120 million write-off could provide a useful starting point for that reset. But its ultimate value to Ghana’s energy sector will be determined by whether it helps transform TOR from a recurring fiscal obligation into a refinery capable of supporting domestic petroleum supply on a commercially sustainable basis.
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