Record-high fuel prices mean government can no longer ignore the glaring need to revamp Tema Oil Refinery (TOR), says Institute for Energy Security (IES).
Ghanaians are staggering under rising fuel costs, with prices having risen about 50 percent in the first five months of this year alone.
The 45,000 barrels per day capacity refinery cracked approximately 7 million barrels of crude between mid-2015 and end 2016, but now sits idle because successive managements and boards since 2017 have literally failed to provide the leadership and direction required to maintain and grow TOR, according to IES.
However, with heightened fears that the worst is yet to come in terms of fuel prices, IES said TOR – the country’s only refinery, which is in a state of coma – could be strategic in providing local consumers some level of comfort if revitalised.
It is the view of IES that the global economic crisis caused by the pandemic and Russian-Ukraine war somehow presents a moment to strategically position TOR to explore opportunities in the petroleum value chain, build synergies between the local upstream and downstream petroleum industries, add real value to national output and save the economy from imported inflationary pressures.
“At a time this nation needs it most, the refinery has ceased to play any meaningful role in managing fuel price and supply risks while pockets of fuel shortages are recorded – with the price of fuel almost quadrupling in the past 6 and half years, stoking inflationary pressures on the entire economy as Ghanaians will attest,” IES said in a statement.
This, it said, has culminated in the refinery sitting idle and hopeless; losing out on prospects from the Russian-Ukraine conflict, plus the potential of generating that synergy between the upstream and downstream sectors of the Ghanaian petroleum industry.
“While the price for a gallon of diesel draws closer to GH¢60, IES wishes to put President Nana Akufo-Addo on notice that TOR is still in coma, requiring his urgent intervention to save the state facility that is saddled with over GH¢400million debt from total collapse,” the statement said.
A team fit for purpose
Given that much of TOR’s problems are caused by mismanagement and political interference, it said it is crucial that only qualified and competent hands are tasked to oversee its turnaround.
“A combination of bad sales and purchase agreements, poor facility maintenance, capacity under-utilisation, operational inefficiencies, under-investment, carelessness and incoherent policies have diminished any hope that the refinery could run uninterrupted and even profitably,” it lamented.
It also urged government to resolve perceived tension and clashes of ideas between the management, board and sector minister, in order to get everyone aligned with efforts to turnaround the once-buoyant state refinery’s fortunes.
It added: “We do not want to hold the belief that President Nana Akufo-Addo is not interested in the functionality of TOR and ongoing fuel price hikes hurting Ghanaians at the pumps.
“IES therefore wishes to call on the president to ensure the refinery’s management and board develop a comprehensive business strategy that ensures TOR is operationally and financially viable, as developments on the international fuel market will continue to have a direct effect on the Ghanaian fuel market.”
Putting TOR on sound footing
The idea of inviting private sector participation has often been flirted with in recent times. For instance, about a year ago Dr. Matthew Opoku Prempeh, Minister of Energy, hinted that government could be open to private participation as part of efforts to revive the company.
“We have to review and assess viable partnerships for TOR. It looks like TOR is in dire need of partnerships to help retool, modernise and expand its capacity,” he said.