THE Tema Oil Refinery (TOR) is one of the strategic state enterprises established by the government to lead the process of economic development in the country.
Its contribution to the growth of the economy of the country cannot be downplayed because of the significance of petroleum products as key drivers of economic growth.
The frequent adjustments in the prices of crude oil on the world market brought many economies, including those of the advanced countries, to their knees.
The oil cartel, the Organisation of Petroleum Exporting Countries (OPEC), suddenly became a force to reckon with, dictating the terms of oil trade as much as they could decide to manipulate supplies to influence the price of crude oil.
The furore that the debt overhang of TOR generated from 2001 to date should, therefore, be understandable. Efforts by the previous administration to bail out TOR, including the introduction of the TOR Recovery Levy into the cost build up of the ex-refinery price of petroleum products, did not resolve the problem.
Rather, Ghanaians were told of a huge debt overhang after the exit of the previous administration, compelling TOR’s creditors to withdraw support for the refinery.
The future of the Ghana Commercial Bank (GCB), the principal financier of TOR, was threatened when the refinery could no longer raise letters of credit to import crude oil to produce petroleum products in order to raise the necessary funds to service the debt owed the bank.
The challenges that confronted the two major state-owned enterprises over the last 15 months or so were not limited to institutional breakdown but also brought about serious dislocations in the supply chain of petroleum products.
Consequently, shortages of petrol, gas and kerosene became regular occurrences, with long queues at gas stations throughout the country.
Just when many people began to lose hope in any attempt to bail out TOR, presto, the government, on Wednesday, paid GH¢445 million to the GCB on behalf of TOR to help reduce the indebtedness of the refinery to the bank. The amount is said to be more than half the GH¢598 million that the refinery owes GCB in overdrafts.
The Daily Graphic commends the Minister of Finance and Economic Planning, Dr Kwabena Duffour, and his team for working hard to raise the amount in three-year fixed rate bonds at a coupon rate of 14.99 per cent.
The fact that the amount was raised on the local capital market indicates that the business community has strong confidence in the local economy. For, if investors did not have confidence in the two institutions — GCB and TOR — to rise above the storm and operate more efficiently, they would not have staked their faith in the local economy.
While steps are being taken to fix the challenged economy, we should resolve never to repeat practices that plunged TOR into a huge debt and thereby create panic among customers and shareholders of GCB.
We know that the government is conscious of its social responsibility to the people and, therefore, cannot pass on the entire cost of crude oil to consumers.
Nonetheless, the Daily Graphic suggests that the tight balance between the commercial viability of state institutions and the welfare of the people be exercised more responsibly in order to safeguard the future of our institutions.
Well done, Dr Duffour and your team, but we urge the government to fashion out more stimulus packages to put back the ship of state on an even keel.
Meanwhile, we urge all the stakeholders to ensure that the government’s lifeline to the two institutions open a new chapter for the revival of GCB and TOR.
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