The Torentco transaction, according to the Tema Oil Refinery (TOR) management, is the greatest alternative for reviving the refinery and ensuring its long-term viability.
TOR, a crucial entity in Ghana’s energy sector, has faced significant challenges in recent years, including operational inefficiencies, financial constraints, and the need for infrastructure upgrades.
Recognizing the urgency to address these issues, TOR’s management in a statement disclosed that it embarked on an extensive evaluation of potential solutions.
According to the management, after careful consideration and rigorous analysis, the management team concluded that the Torentco deal offers the most promising path forward.
Several Civil Society Organisations (CSOs) including the Africa Center for Energy Policy (ACEP) have raised concerns about the lease agreement negotiations between Torentco and the Tema Oil Refinery (TOR).
ACEP revealed that Torentco, a newly established local Ghanaian company formed in January 2023, lacks the track record in the petroleum business and does not have the capacity to effectively take over TOR.
“This is a new local Ghanaian company formed here in Ghana in January 2023, with no track record. If they fail to deliver, how do you hold them accountable? They don’t have any track record of dealing in petroleum businesses,” Mr Boakye said in an interview on Citi News.
But TOR in an official response said the proposed deal entails a strategic partnership between TOR and Torentco, with the aim of modernizing the refinery’s operations, optimizing efficiency, and enhancing its competitive position. The collaboration will involve substantial investments in infrastructure, technology upgrades, and capacity expansion.
According to TOR’s management, the Torentco deal will ensure a reliable supply of crude oil, a critical input for the refinery’s operations.
TOR added that the Torentco deal is expected to bring much-needed financial stability to the refinery by leveraging Torentco’s financial resources and access to capital markets, the refinery will have the necessary funding for infrastructure upgrades, maintenance, and working capital, ensuring uninterrupted operations and improved financial performance.
Furthermore, the collaboration will prevent some of the brightest engineers in the company from leaving.
The management of TOR is confident that the Torentco deal represents a transformative opportunity for the refinery and Ghana’s energy sector as a whole. They believe that this strategic partnership will reposition TOR as a vital contributor to the country’s economic growth, job creation, and energy self-sufficiency.
“The proposed transaction serves to achieve the following: Allow TOR to move from being an annual loss-making entity to sustained positive net cash flow during the term of the lease. Demonstrate that crude oil can be processed at the refinery, achieving industry-accepted yields if managed efficiently.
A major problem engulfing the last two counterparties to have processed crude oil at TOR was the issue of product recoveries below the contractual yields, resulting in cash penalties against TOR that are currently outstanding and stem the tide of the continuous exodus of our valued engineering staff who leave every month for more secure opportunities in the Middle East and other parts of the world.”