TOR Continues To Struggle With Debt And Losses- Kwadwo Poku


The Tema Oil Refinery (TOR) has been a long-standing financial burden for the country, according to Kwadwo Nsafoa Poku, the Executive Director of the Institute for Energy Policies and Research (INSTEPR).

He stated that TOR’s historical records show that the debt of the refinery nearly caused the collapse of the Ghana Commercial Bank two decades ago.

In response, the TOR Debt Recovery Levy was introduced in 2003, with the debt standing at GHc450 million at the time.

A recent report released by the Africa Centre for Energy Policy (ACEP) revealed that TOR has been losing substantial amounts of money over the years.

Between 2014 and 2018, the refinery’s losses exceeded GHC300 million annually, totaling GHC 2.707 billion over the five-year period.

The 2022 Income Statement of the company shows a loss of GHC1.675 billion. These figures contradict claims made by some experts that TOR has the potential to generate annual profits of USD $700 million.

Additionally, TOR currently faces significant debts to various entities, including staff pensions, the Ghana Revenue Authority (GRA), Ghana Water, and the Electricity Company of Ghana (ECG).

Overall, TOR’s debt stands at USD $540 million and continues to grow. Despite the mounting debt and financial struggles, the refinery has not processed any crude oil since March 2021, while still paying its workers’ salaries.

In light of TOR’s financial situation, Mr. Poku discussed a proposal initiated by Torentco Asset Management Limited (TAML) for the lease of the refinery. TAML would make significant monthly and annual payments to cover operating expenses, taxes, insurance, and maintenance costs. This proposal is aimed at providing a temporary solution to keep the refinery operational for the next six years while the government seeks a long-term and more favorable investment opportunity. If such an opportunity arises, the government has the option to terminate the agreement with TAML.

Mr. Poku emphasized that the proposal put forward by TAML is currently the best option available in the short to medium term.

He also highlighted that the government has not prevented other companies, including Legacy Capital from Dubai, from expressing their interest in engaging with TOR.

He expressed frustration at the skepticism and criticism faced by Ghanaian companies, while similar concerns are often overlooked when dealing with foreign entities.

Due to the government’s lack of funds or ability to provide a sovereign guarantee for TOR’s revival, Mr. Poku suggested that without a viable solution, the refinery may have to shut down, leading to the loss of jobs for its workers.

He emphasized the importance of finding a transaction that will result in positive cashflow for TOR and alleviate its financial burden.

The ongoing financial challenges faced by the Tema Oil Refinery indicate the need for immediate solutions to ensure its sustainability.

The proposal presented by Torentco Asset Management Limited aims to provide a short-term lifeline for the refinery while the government explores permanent solutions.

“The refinery will move from a loss-making company to a net positive cashflow of $14.79 million a year while all their bills and financial obligations fully paid. Over the 6 year lease period TOR will receive a total cashflow of $88.7 million with all GRA , ECG, Workers renumeration, Ghana water paid. Plus the one time payment of $22.5 million before the lease contract starts.

“TAML in turn will assume the responsibility of importing 8 million barrels of crude oil a year to be refined at the refinery and the sale of the refined products. Whether TAML makes a loss or profit in their refining and trade of products is not the concern of the Government or TOR. This proposal was envisaged as a stop gap measure to keep the refinery running for the next 6 years while government looks for a permanent solution. TAML proposed and agreed that during the 6-year lease, government can terminate the agreement if they find an investment proposal which is long term and better terms than what they proposed.

“INSTEPR is of the view that this proposal is the best proposal on the table within the short to medium term. Government has not stopped any company from expressing interest and to that effect we have sighted a letter dated 18th April 2023 from the Office of the President, asking the Ministry of Energy and TOR to engage a company called Legacy Capital from Dubai.

“We always say we want to build Ghanaian wealth and business but the minute a company from Ghana express interest in doing a transaction, all hell breaks loose. You will hear ‘he is politically connected, he does not have capacity, friend with the president family’ etc.

“Meanwhile, if you check the history and competence of all these companies registered in Dubai, they are empty as well but I guess in Ghana we ask less questions when it’s the white man or the Arab.

“The government does not have the $100 million needed to revamp TOR or sovereign guarantee to be given to any company to bring crude oil to TOR. So with the current discussion, we must as well shut the refinery and all workers look for other jobs. As the refinery stands, it has negative cashflow so any transaction that will bring about positive cashflow is welcoming news, ” he said in a statement released.

By Vincent Kubi