Building new oil refineries not necessary – Alex Mould
Currently, TOR is able to refine crude up to 20,000 barrels of oil p
But Boakye Agyarko had mentioned that, this should increase by about seven times to 150,000 barrels of oil with the new refineries.
“We want to make sure that in the next three to four years, we build a brand new TOR of about 150,000 barrels of oil per day throughput, and then gradually ease out the old TOR which becomes a tank farm for the new TOR. Because the new TOR currently is at 20,000 barrels of oil per day which is not satisfactory, even if you ramp it up, the most you could get out of the old engine is 80,000 barrels of oil per day,” he stated.
Meanwhile, some energy experts including the IES’ have raised concerns about the supposed TOR ineffectiveness, which among others had to do with the leadership challenges at the refinery, which they argue has contributed to the inability to sustain operations.
He explained that, the current key performance indicators (KPIs) of TOR suggest it is performing far below par and continues to make losses from its operations. This is because there has been relatively no new investment in maintenance over a number of years, or that the maintenance programs have not been carried out efficiently; this is because TOR cannot raise money from banks and has to rely on its shareholder – Government of Ghana (GoG)) – to fund these. But, GoG does not have the money to do so, mainly because GoG is reluctant to fund projects like this when funding should be raised from the banks.
“TOR cannot raise money from banks first because it has no track record of running a cash flow positive venture and its management over the years lacks the ability to convince financial institutions that there would be no interference from GoG with subsidies (which remain unpaid) and that it would run TOR on sound economic principles.
“TOR has not also been able to convince the banks that the amount needed to debottleneck TOR nor the amount needed for the upgrade from 45,000bbl/day to 75,000 or 100,000bbl/day will result in a positive net present value (NPV) venture, that is, they will be able to pay back the banks on time and without default, and also run a profitable operation.”
So these are the issues, he said.
However, he answered a question he asked himself on why the present state of TOR. “Bad strategy, organization size, terrible management and to be frank, an ineffective Board, and worse of all a hands-off shareholder, that would rather park its debts in TOR (as unpaid subsidies) than show the International Monetary Fund (IMF) and World Bank (WB) its true debt position.
“So, if say government decides to build a new refinery on its own, it will never get the financing for this as a project financing like all investors will, unless we pledge our oil and/or Cocoa.
He is of the view that, government cannot raise funds by itself to build new state-owned refineries, until a private investor steps in and will be run and managed as a pure private entity. He therefore cautioned the government to stop claiming it is going to build new refineries.
“So, my conclusion is Govt will not build a new refinery themselves……only foreign investors will;
“Will GoG rehabilitate TOR and in sometime in the future upgrade TOR? I currently don’t see how in the near future unless the private sector comes in and controls TOR’