The Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors (CBOD), Dr. Patrick Ofori, has disclosed the readiness of Bulk Oil Distribution Companies (BDCs) to acquire equity stakes in the Tema Oil Refinery (TOR).
This move is part of a broader initiative to support the Ghanaian government in revitalizing the country’s state-owned refinery and enhancing its operational efficiency.
“There are certain key strategic assets in this country that need to be revitalized, one such strategic asset is TOR,” Dr. Ofori said during a recent public address.
He emphasized the importance of public-private collaboration in restoring TOR to its former prominence. “I have spoken with some BDCs who have said they are willing to join forces and partner with the government to revamp TOR and own stakes in TOR,” he added.
This announcement highlights a potential turning point for TOR, which has faced numerous operational and financial challenges over the years.
Dr. Ofori underscored the significance of TOR as a critical national asset for Ghana’s economy. He noted that the refinery plays a pivotal role in ensuring a stable supply of refined petroleum products for both domestic and regional markets.
TOR’s efficient operation could also generate foreign exchange revenue through exports to neighboring countries, ultimately bolstering Ghana’s local currency, the cedi.
“The BDCs have the right partnerships and are ready to make the right kind of investment to bring TOR back onstream and ramp up production levels for in-country supply and even exports to neighboring countries.”
Dr. Patrick Kwaku Ofori, CEO of GCBOD
In addition to its strategic importance, Dr. Ofori highlighted TOR’s historical ability to operate profitably under the right conditions.
He pointed to past periods when the refinery thrived, thanks to financial facilities that enabled smooth operations.
However, systemic challenges, including government subsidies and limitations on charging production costs, have hindered TOR’s profitability and growth.
“The losses incurred by TOR were not because the refinery was inherently unprofitable but due to systemic issues, such as being denied the ability to charge for production costs during the era of subsidies.”
Dr. Patrick Kwaku Ofori, CEO of GCBOD
BDCs’ Proposed Investment Model
The BDCs propose a partnership model that combines private-sector efficiency with government oversight. This model is designed to introduce accountability and streamline TOR’s operations while reducing financial risks.
A key feature of this plan involves the use of Letters of Credit (LCs) to secure financial liquidity. This approach would reduce the need for TOR to rely on payments from multiple Oil Marketing Companies (OMCs), which has historically created financial bottlenecks.
“With a smaller group of reliable stakeholders posting LCs, TOR’s financial liquidity can be secured, avoiding the pitfalls of chasing overdue payments from multiple OMCs,” Dr. Ofori noted.
Additionally, the BDCs emphasized the importance of modernizing TOR’s infrastructure. Dr. Ofori highlighted the need for investments in advanced monitoring systems, supply chain management tools, and refining technologies.
These upgrades would enable TOR to operate at optimal efficiency, reducing operational costs and improving output quality.
TOR has a long history of challenges, ranging from equipment failures to financial mismanagement. One of the most significant issues has been the lack of consistent investment in its infrastructure.
Dr. Ofori stressed that private-sector involvement could address these challenges by bringing in much-needed capital and expertise.
He also pointed out that TOR’s struggles were often exacerbated by external factors, such as government-imposed subsidies that undermined the refinery’s ability to recover production costs.
Despite these challenges, Dr. Ofori expressed optimism about TOR’s potential. “With the right partnerships and financial reforms, TOR can become a major player in Ghana’s energy sector once again,” he said.
Dr. Ofori concluded by calling on the government and the incoming administration to prioritize TOR’s revitalization. He stressed that public-private partnerships, particularly with the BDCs, offer a viable pathway to achieving this goal.
“There is an opportunity for the government and private stakeholders to come together to turn TOR into a success story,” he said.
By addressing inefficiencies, introducing modern technologies, and leveraging private-sector resources, the proposed investment strategy could transform TOR into a key driver of Ghana’s energy sector.
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