The management of Ghana’s Tema Oil Refinery (TOR) has announced its endorsement of the Torentco deal as the most promising solution to revive the refinery and ensure its long-term sustainability. TOR, a crucial entity in Ghana’s energy sector, has faced significant challenges including operational inefficiencies, financial constraints, and infrastructure upgrades.
TOR’s management undertook a comprehensive evaluation of potential solutions to address these pressing issues. After careful consideration and rigorous analysis, they concluded that the Torentco deal offers the most viable path forward.
However, several Civil Society Organizations (CSOs), including the Africa Center for Energy Policy (ACEP), have expressed concerns regarding the lease agreement negotiations between Torentco and TOR. ACEP has highlighted Torentco’s lack of a track record in the petroleum business and its limited capacity to effectively take over TOR.
In response to these concerns, TOR clarified that the proposed deal involves a strategic partnership between TOR and Torentco. The primary objectives of this collaboration are to modernise the refinery’s operations, optimise efficiency, and enhance its competitive position. The partnership would entail substantial investments in infrastructure, technology upgrades, and capacity expansion.
TOR’s management emphasised that the Torentco deal would ensure a reliable supply of crude oil, a critical input for the refinery’s operations. They further stated that the partnership would bring much-needed financial stability to TOR by leveraging Torentco’s financial resources and access to capital markets. This infusion of funds would facilitate infrastructure upgrades, maintenance, and working capital, ensuring uninterrupted operations and improved financial performance.
TOR’s management also highlighted that the collaboration would prevent the departure of skilled engineers from the company. They expressed confidence that the Torentco deal represents a transformative opportunity for TOR and Ghana’s energy sector as a whole. The partnership aims to reposition TOR as a vital contributor to the country’s economic growth, job creation, and energy self-sufficiency.
The proposed transaction seeks to achieve two main objectives: firstly, enabling TOR to transition from an annual loss-making entity to sustained positive net cash flow during the lease term. Secondly, demonstrating that the refinery can process crude oil with industry-accepted yields if managed efficiently. Previous issues with product recoveries falling below contractual yields have resulted in cash penalties against TOR, which the management aims to avoid through this partnership. Additionally, the deal aims to address the exodus of talented engineering staff seeking more secure opportunities abroad.
The management of Tema Oil Refinery is optimistic that the Torentco deal will revitalize the refinery, improve its financial performance, and position it as a vital player in Ghana’s energy sector. While concerns have been raised by CSOs regarding Torentco’s lack of experience, TOR’s management remains committed to the strategic partnership, citing the potential for technological advancements, infrastructure development, and increased operational efficiency.
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