The Bulk Oil Storage and Transportation Company Limited (BOST), continues to run at a loss since 2016, with current financial performance indicating a net loss of GHS88.39 million in 2019, according to the State Interest and Governance Authority (SIGA).
Although the losses incurred over the period (2016-2019) have been on the high side averagely, revenues have declined at significant margins, standing at GHS524.12 million as of 2019. When compared with revenues in 2016 (GHS2.92 billion), this reflects a shortfall of GHS2.40billion. BOST’s net loss margin as at 2019 stood at 16.86 per cent.
Compared with 2018, however, revenues increased by 60.18 per cent from GHS327.20 million to GHS524.12 million in 2019. The revenue increase was attributable to 2,282 percent and 105.35 percent increases in petrol and diesel sales respectively.
Furthermore, the revenue from petrol and diesel declined by 85.36 percent between 2017 (GHS1.8 billion) and 2018 (GHS263.64 million) before a 94.69 percent increase in 2019 (GHS513.29 million).
While the increase from 2018 figures, provided room for a sigh, the increase was far below the SOE’s potential as reflected in the 2016 fiscal year. Therefore, with the current situation of incurring losses every financial year and with low revenue accruals as highlighted above, makes this turn of events the more worrying.
Expenses and profitability of BOST in FY2019
Regards expenses incurred in the year, the report indicated that administrative expenses declined by 26.20 percent between 2018 (GH¢241.52 million) and FY2019 (GH¢178.24 million). Albeit, this decline was attributed to the non-provision of doubtful debt in 2018 Administrative expenses as part of 2019’s.
“The fall in administrative expenses was attributed to BOST not making any provisions for doubtful debt, which accounted 35.78 per cent of administrative expenses in FY2018’s administrative expenses in FY2019.”
SIGA report
Moreover, the report highlights that the company’s liquidity position was very challenging during the period as its current and quick ratios for 2019 were 0.90 and 0.84 respectively.
Nonetheless, on account of the company’s profitability, it achieved an Earnings before Interest and Taxes (EBIT) margin of 3.79 per cent in 2019, up from a negative EBIT margin of 52.21 per cent in the preceding year.
Taking a cue from the recently released 2020 Auditor-General’s Report, BOST was found to have indulged in a number of infractions pertaining to procurement processes to the tune of GHS39 million. These scenarios among others create rooms for these losses to be incurred and thus unavoidable.
BOST’s mandate is to develop a network of petroleum storage tanks and pipeline infrastructure throughout the country as well as keep strategic stocks of petroleum products.
This mandate is a very important undertaking in the country’s petroleum value chain. Therefore, more efforts should be channeled to make the company get back on its feet. This call applies to all SOEs as most incur losses and are a financial burden to the State.
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