Former Ghana National Petroleum Corporation (GNPC) boss, Alexander Mould is pessimistic of the survival of the proposed ‘new TOR’, oil refinery, to be sited at Takoradi.
He is of the view that, if government is to interfere and control the affairs the ‘new TOR’, then it will not survive with reference to the current state of TOR which has directs interference of government in its operations.
Mr. Mould is therefore advising the government to look for strategic investor to build, own and operate for it to be out of government interference.
Speaking to Economy Times on his take on the plan of government to build a new oil refinery he said, “It all depends on the economics of cost of production, free cash flow to service the debt, versus the supply of petroleum products from markets vis a vis the import parity.”
He added, although he hasn’t done any thorough economic analysis of the new oil refinery yet, he can predict it is not going to be easy for the survival of the ‘new TOR’.
“I haven’t done any back of the envelop mathematics on this but it’s not going to be easy given our history of making a lot of players in the Industry bankrupt from subsidies (and nonpayment of these subsidies).
“It would require a strict adherence to best market practices, completely devoid of GoG interference and the right strategy and operations for the refinery to attract the investors”, he emphasized.
Despite, the challenges bedeviling the Tema Oil Refinery (TOR), the nation’s only oil refinery, which has cost the country a lot in the past, the government has revealed plans to build a new refinery at Takoradi.
The Takoradi refinery is set to refine 150, 000 barrels of oil per-day when fully built, Energy Minister, Boakye Agyarko has revealed.
The “new TOR”, as the Minister terms it, will be will reduce significantly, the amount of oil the country imports to meets its demands, and to attain government’s vision of making Ghana a hub for refined petroleum products in the West African sub-region.
“Even though we are crude producers, we have become net importers of petroleum products. We in Ghana are running perennially short of petroleum products and it reflects in the instability of the demand-supply equation.
This revelation comes at a time when, industry experts and economists are on government to operationalize the old TOR.
TOR has been defunct recent years, until in 2016, when it became operational for some months prior to the elections. It became defunct again after change of government last year.
TOR is faced with many challenges which include obsolete and rusting equipments and machines, huge accumulated debt, and large staffing.
The idea, therefore, is to create a hub in the Western region where you have the refining, the storage, the transportation, and trading, all happening within an enclave.
The idea subsequent to this, which has been discussed with the board of TOR, is to make sure that in the next three-four years, we build a new TOR of about 150,000 barrels a day, and then gradually ease out the old TOR which becomes a tank farm for the new TOR,” he said.
Mr. Agyarko, at the 2018 Downstream Colloquium organized by the National Petroleum Authority in Accra, noted: “We have already put in place an implementation committee which is looking at all the facts and the regulations required.
We have sent out the various teams to look at all the other hubs that operate in the world; Rotterdam, Singapore, Malaysia, to study and understand how it is done properly, to see who we can partner with efficiently and productively. I believe that in the not too distant future, 2-3years, you will begin to see the actual manifestation of these developments on the ground,” the Minister added.
Meanwhile, in recent past, energy experts have frowned on the country’s over dependence on imported refined petroleum products into the country despites the ability of TOR’s to refine these products.
The Institute of Energy Security (IES) recently urged government to work to revamp the Tema Oil Refinery (TOR) in order to reduce the country’s over dependence on imported fuel.
The IES argues that the development has dire implications should there be threats of cuts in supply of refined petroleum products from the world market.
The comments come on the back of shortage of fuel in Nigeria for at least three weeks now.
However, the Executive Director of IES, Paa Kwesi Anamua Sakyi wants the revamping of the Tema Oil Refinery to be paramount in saving Ghana from a similar fate going forward.
“Lessons that Ghana can draw from this is when all your fuel consumption is dependent on imports, it becomes quite dangerous for you especially when importers or suppliers of these products have a challenge with the government, they might choose not to bring in the products and so it becomes a problem.”
“So we should make our Tema Oil Refinery work because it is a strategic asset that we have we can’t depend on just oil imports. The whole of 2017, all the oil that we have been consuming, came from oil imports so we should ensure that TOR works as soon as possible,” he again claimed.
TOR, Ghana’s only refinery has been plagued with funding challenges, resulting in several shut; meanwhile it seems things are being done to put the refinery on operation once again.
According TOR management, maintenance works on the Refinery has been completed ahead of the scheduled commencement of crude oil refinery in the first quarter of 2018.
Already, the Finance Minister, Ken Ofori Atta has disclosed that government is seeking to revive operations at the TOR by the first quarter of next year, as it aims at improving the local production of some essential products for the energy sector.
The move according to Mr. Ofori Atta is also in line with plans to reposition the energy sector to reduce the importation of such petroleum products.
TOR has since the commercial exploration of oil in 2010, been saddled with numerous challenges that have also hampered its refinery capacities.
Even though TOR had been tipped to increase its refinery productions from 16 to 18 million barrels, it is yet to achieve this aim.
With the discovery of oil and gas in Ghana, the company has attempted to expand and position itself to improve its infrastructure.
This is to ensure reliability of petroleum products on the Ghanaian market and also to enhance export to the ECOWAS sub-region.
Management of TOR is counting on workers to put in more efforts to ensure the efficiency of the refinery.
“A positive attitude of employees towards work is what will keep the company high as production starts, in order to have TOR bounce back on its feet,” TOR’s Board Chairman, Tongreaan Kugbilsong Nanlebegtang, said.
Since 1963, TOR has been the engine of growth for Ghana’s economy in the vision of successive governments’ efforts at having a vibrant and robust energy sector.
Ghana’s only refinery has been plagued with funding challenges, which have resulted in several shutdowns.
Successive governments have had to institute a recovery debt levy to offset its indebtedness.
Managing Director of TOR Isaac Osei said the refinery will expand further than it is currently with prudent management at the helm of affairs.
He noted that training and re-training of staff will play an integral role in strategizing for growth in the coming year.
Story: Adnan Adams Mohammed