Payments made from the ESLA (Energy Sector Levies and Account) for the settlement of Tema Oil Refinery (TOR) debt from 2016 to 2020 amounted to GHS368.81 million. This represents 2.6 percent of total utilized ESLA levies lodged into the ESLA account, according to the 2020 ESLA report.
According to the report, a total of GHS1.42 billion was utilized during the period under review out of the total amount of GHS1.62 billion lodged into the ESLA account. Meanwhile, GHS5.08 billion of the total utilization was transferred to ESLA PLC.
In 2017, TOR’s debt outstanding had accumulated to US$345 million with about GHS 1.05 billion owed to third parties, traders and financial institutions. In 2018, reports were that the government had made payments to the tune of GHS1 billion and US$67 million, thus allowing the refinery to engage in productive activities.
That notwithstanding, in 2019, an additional GHS186 million was added to the debt outstanding, pushing the total debt to GHS1.5 billion at close of Q1 2019. Thus, emanating from a net loss recorded during the period. As at 2020, TOR’s total debt outstanding continues to widen with current debt amounting to over US$345 million.
TOR’s plants have also underserved their purpose and have broadly remained inefficient over the years, owing to lack of maintenance and regular breakdowns, etc.
Almost every year, TOR’s plants undergo shutdowns. The most serious operational failure it experienced was in 2017 when a damper failure caused one of the furnace of the CDU to explode. In 2018, TOR closed down when it run out of crude of oil and could not secure funding to purchase more, among others. In all of these cases, promises were given by government officials indicating a revamp of the refinery. Yet, the status quo is still being maintained, even into this year.
With greater dependence on crude oil imports to feed its plants for processing, they have also weighed heavily on TOR’s budget deficit, thus, leading to its rising debts.
Components of TOR’s debt woes
Historically, the components of TOR’s debts have typically consisted of statutory liabilities owed governmental institutions such as the GRA, SSNIT, personnel costs, utility bills, insurance premiums.
TOR’s current predicament has not turned benign all of a sudden. It continues to pile up huge debts, and unfortunately the Ghanaian tax payer still has to bear the costs in levies, which do not seem to disappear anytime soon.
With a total CDU capacity of 45,000 bpsd and a storage capacity of 1,000,000 mt, albeit the refinery has produced far below its capacity for the most of its history. However, efforts to revive TOR have been sporadic by far on the part of the government.
Meanwhile, the importance of operating a refinery cannot be overestimated. Importing refined petroleum products into the country is undesirable, as such would only end up draining the public purse. But with current commitments, a substantive plan to revive the refinery is almost non-existent, they have more or less been verbal and nothing more.
A case in point is the current Minister’s assurance to turn the Tema Oil Refinery into a premium refinery in West Africa. However, a May 2021 publication by S&P Global Platts underscores that the government intends to operate a new refinery with a capacity of 150,000b/d in Takoradi. This refinery, it mentions is separate from a refinery the government has planned to build in replacement of TOR.
The potential benefits in operating a refinery are plenteous. Increased commitment from government, operating under proper management, securing and properly directing investments, are among actions that are urgently required.
