The Minority in Parliament has blamed the Energy Minister Boakye Agyarko, for the anticipated temporary shutdown of Tema Oil Refinery (TOR), due to the firm’s inability to raise letters of credit to purchase crude.
According to the Minority Spokesperson on Mines and Energy, Adams Mutawakilu, a recent comment by the Energy Minister suggesting that TOR was going to be converted into a tank farm, accounts for the unwillingness of investors to help raise letters of credit needed to bring in crude for TOR to function.
“Truly, TOR’s challenges started from 2017. We are all aware under the NDC, TOR was making profit. The machinery were down. The CEO promised that it will be operational and truly it became operational and now we are hearing that they are not able to raise letters of credit… IES made it clear and their boss put everything squarely on the Minister and I support it 100%.
“As political leaders, we are in a technological world. Whatever you say ripples round the whole world so if you make a certain emphatic statement, lenders and everybody becomes worried so when the Minister made the statement in May at an offshore technological conference, it set the tone for lenders to be worried…Definitely, the banks will feel that is the end of the refinery and you could see that it is affecting operations of TOR. Today, it is not because machines are down, but it is because they cannot raise letters of credit,” said the legislator.
Speaking to Citi News,the Damongo MP indicated that the Energy Minister must quickly resolve the challenges at TOR to bring it back on track.
“I want to request from the Minister to assure the market that TOR will not be turned into a tank farm. …He should tell Ghanaians what measures he is putting in place to ensure that those debts are paid from the ESLA bond. He should assure the market that he has taken a position to ensure that the next bond will be used to clear the debts of TOR.”
TOR shuts down again
On Monday, TOR shut down again following a shortage of crude oil at the facility.
The refinery, which has the capacity to refine about 45,000 barrels of crude oil a day, has been operating below capacity for some time now.
Confirming the shutdown to Citi News, the Executive Director of the Institute of Energy Security, Kwasi Anamua Sakyi, explained that TOR is unable to raise its own letters of credit to acquire crude oil.
‘Tank farm saga’
The Energy Minister; Boakye Agyarko at a conference in the United States had indicated that government intends to turn TOR into a tank farm, ahead of the construction of a new refinery in the Western Region.
In May 2018, the Energy Minister disclosed that the government had prepared land in parts of the Western Region for investors interested in such venture to set up in a free zone enclave.
He explained that potential companies that would take advantage of this opportunity would enjoy enormous benefits, including tax breaks, and would also be required to export their products.
But some critics have rejected the proposal.
TOR debt recovery levy
The government instituted the TOR Debt Recovery Levy in a bid to clear the massive debt that hanged on TOR as a result of under-recoveries.
In 2015, TOR’s debt was estimated to be in excess of 1.9 billion.
The Debt Recovery Fund Levy Act 2003 (Act 642) was passed to help finance TOR’s accumulated debt and cater for the company’s under recovery.
Due to this, a debt recovery levy was subsequently imposed on some petroleum products.
TOR debt overpaid; stop levying Ghanaians – ACEP
The Africa Centre for Energy Policy (ACEP) in 2016 charged the government to stop taxing Ghanaians over the TOR Debt Recovery Levy since their investigations had shown that technically, the “debt has been cleared and even overpaid.”
ACEP said at the time the levy was instituted, the total debt stood at GHc450 million.
The centre argued that if for any reason the debt had not been cleared, then the government is to blame for either mismanaging the levies or for non-compliance.
Source: citinewsroom.com