A few days ago, President of Ghana, H.E Akuffo-Addo, nominated Mr Francis Boateng as the new Managing Director (MD) for the Tema Oil Refinery (TOR). Will this change impact the company’s fortunes?
This recent nomination follows the resignation of Mr Kwaku Asante Berko, the immediate past MD. He left over allegations of his involvement in a $4.5m bribery scandal by the Securities and Exchange Commission in the United States of America.
Mr Asante Berko is accused of taking the said amount of money from a Turkish based firm in a bid to bribe officials in Ghana. The allegation was in order to secure a contract for the Turkish firm to build an electrical power plant in the country.
This latest appointment at TOR takes the current government’s tally to four since it assumed the reigns of governance in January 2017.
TOR MD position
The TOR MD position appears to be a hot seat to occupy as it has been witnessed in Ghana over the years.
Indeed, TOR, in recent history, has enjoyed very little stability at its helm of affairs due to the fact that it has been managed by many different people on different occasions. Mr Boateng’s appointment, takes the number to eight in total since May 2010, including two people who served as MDs in acting capacities.
Prior to Mr Asante Berko, who served for only two months, there was Ing. Herbert Ato Morrison, who took over, in acting capacity, from Mr Isaac Osei. Mr Osei resigned in December 2019 over some unexplained issues, after serving for more than two years.
But what does all of these erratic changes in the TOR MD position mean to the operations of the refinery in terms profitability as a business entity?
Frequent changes inhibiting TOR’s progress?
Management longevity is very important to the growth and success of every business entity because it ensures continuity in strategy, long-term plans and identity. It also guarantees knowledge and expertise acquired over long years of service.
However, with no end in sight in the frequent changes in the TOR MD position, it looks like the company would keep fidgeting with its fortunes for a very long time.
Undoubtedly, many of the challenges that confront the company is largely due to how poorly the firm has been managed over the years. This is mainly due to the political interference in the affairs of the refinery relative to who heads the company and how the person runs the business.
These challenges coupled with others have, prevented TOR from making profit, thereby running the company into continuum of losses, more losses and debts.
This, in the process has led to difficulties in meeting the institutions’s operational expenses, such as utility bills, insurance premiums as well as statutory payments.
In July 2019, an internal management document from the company, dubbed the ‘Tema Oil Refinery Variance Report’, revealed that the company was not in a good financial position to even pay its debts.
Indeed, the report also showed that the company made a loss of GH₵185 million as at the end of April 2019.
Apart from the above, TOR has also been grappling with a legacy debt, which has been hanging on it neck close to two decades.
However, as at the end of April 2019, the debt was reduced to GH₵1.85 billion after GH₵1 billion of it was cleared by ESLA, a special purpose vehicle introduced by government to defray TOR’S legacy debt.
Does TOR perform better when there is stability?
TOR was established in 1960 and authorized by law to operate both as a refiner of crude oil and seller of petroleum products. It has an output capacity of about 6,138 metric tonnes per day.
Approximately 2,000,000 tonnes of refined petroleum products are used annually in the Ghanaian economy. However, TOR’s production reduces the cost of petroleum products imported into the country.
TOR’s production capacity means that it has the potential to rake in more money for the country if it is managed properly and devoid of meddling at the top. However this is not the case due to the lack of stability in the management of the company.
Interestingly, whenever a Managing Director of TOR is allowed to oversee the refinery for two or more years, the company makes significant progress in its business operations, thereby earning profit for the state.
For instance, when Kwame Awuah Darko, the former MD of TOR, was allowed to run the show for over two years, the refinery posted a profit of $800,000 from its operations from February 16 to April 20, 2016.
This, at the time, represented the first time TOR recorded a profit in seven years. Industry watchers described this feat as a sign of a possible revival of the company.
The Chairman of Senior and Junior Staff Association of TOR, John Ebo Botwe, in an interview with Accra FM in 2017, also affirmed this point while commenting on the appointment of Mr Isaac Osei.
He said that anytime there was some stability at the top, relative to the Managing Directorship position, the company makes significant progress in its fortunes.
Mr Botwe said “For us, the workers at TOR, we don’t do politics and so we think management of TOR should be devoid of politics. Given the type of business we do, when there is too much political interference, it worries the workers and the economy in general”.
“So, we are just pleading that the political powers that be should know that the refinery is a strategic asset. If it is devoid of politics at least we can have good profits. The current Managing Director [Kwame Awuah Darko] showed that leadership style. Although there were some political interferences, he had his way to make sure that the company runs” Mr Botwe told Accra FM.
Additionally, in December 2016, TOR took delivery of the first local crude oil produced from the Tweneboah, Enyera, and Ntomme (TEN) fields in the Western Region.
“A cargo of approximately 1 million barrels was delivered aboard the vessel MT. Bordeira, and supplied by AOT Energy on an Open-Account basis (120-days credit)”, according to an article written by Paa Kwasi Anamua Sakyi and published in the B&FT website in 2019.
Isaac Osei’s tenure
Again, during Mr Isaac Osei’s tenure, who served for nearly three years, TOR improved upon its fortunes whilst making several investments along the line.
Under his leadership, the company invested heavily in its facilities to boost the efficiency and reliability of its processing plants.
For instance, In October 2018, the Tema Oil Refinery acquired a new 120 ton per hour steam boiler which is expected to assist in the power generation activities of the refinery.
Also, in August 2019, TOR processed 4 million barrels of crude oil out of a total of 11 million barrels following the signing of a tolling crude oil processing agreement between Tema Oil Refinery and a locally based energy company backed by its international oil and gas trading partner, Vitol.
The contract, according a B&FT publication, was to ensure that TOR continued processing of crude oil up to the end of September 2020.
In conclusion, it obvious from the above that when there is stability in the TOR MD position, the company performs better in its business operations.
By Salifu B.B. Moro