You are here: HomeBusiness2018 05 13Article 651457

Political interference, not workers cause of TOR’s woes – Hosi

Comment: Debottleneck TOR: Process Audit overdue

2018-05-18 01:05:58
Comment to:
TOR needs mechanical audit; not tank farm - Senyo

TOR CEO, Energy Ministry in stand-off over tank farm

The real question for any shareholder is whether to invest in debottlenecking an old plant, and then upgrade to increase its capacity , or simply scrap the existing and fund a new build

This has been done even in football - Arsenal invested in a new build, the Emirates, and scrapped Highbury park

So let’s try and understand the issues before we turn this once again into a ‘spectator’ political quarrel as we do most things instead of behaving like rationale discerning ‘citizens’

The current key performing 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 can not raise money from banks and has to rely on shareholder - GoG - to fund these ; which GoG does not have the money to do so, mainly also because GoG is reluctant to fund projects like this when funding should be raised from the banks;

TOR can not 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 wrt subsidies (which remain unpaid) and that it would run TOR on sound economic principles; secondly TORs indebtedness is humongous and it’s balanve sheet needs cleaning up;

So no financial institution will fund TOR for a debottleneck/upgrade in its present form unless there is an explicit guarantee from GoG probably backed by identified oil or cocoa flows

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 45k bbl/day to 75k or 100k bbl/day will result in a positive NPV venture ie they will be able to pay back the banks in time and without default, am\nd also run a profitable operation

So these are the issues

So, why do we find ourself in this position wrt TOR

- bad strategy, organisation 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 IMF and WB its true debt position

Like ECG the only way out is to get the private sector involved one way or the other, not because we don’t have competent people in Govt to run ToR but becos we don’t put persons who have the knowledge and clout that will take on the shareholder, GoG, to stop interfering in TOR operations and to make good its promises like paying what is owed to TOR inform of subsidies and not allowing any subsidies ever to be unpaid; You see the private sector (foreign investors especially) will not take this crap from Govt

So, if say GOG decides to build a new refinery on its own (oh, btw, it will never get the financing for this as a project financing like all investors will, unless we pledge our oil and/or Cocoa) the question is what will change?

The answer is Nothing

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? Hmmmm, I currently don’t see how in the near future unless the private sector comes in and controls TOR;

Now, that’s food for is where the politics emerge again!!!!

This article is closed for comments.