….With an inexperienced company
The Africa Center for Energy Policy (ACEP) and IMANI Ghana, have raised concerns about the lease agreement negotiations between Torentco and the Tema Oil Refinery (TOR).
The Herald’s insiders, had mentioned the Energy Minister, Dr. Matthew Opoku Prempeh and a cousin of the President Nana Akufo-Addo, Nana Bediatuo Asante, who doubles as his Executive Secretary, have for some time now been haggling over TOR, a state facility.
Torentco is said to be the baby of Nana Bediatuo, and about to take away the state facility almost for free to a company which hadn’t sold a one litre bottle of kerosene before.
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.
IMANI, has also claimed TOR, has asked Ghana’s Public Procurement Authority (PPA) to approve a deal to lease its main production assets to a company called Torentco Asset Management, which will take over TOR’s core refining business for six years.
“Torentco is allowed to refine up to 8 million barrels of oil a year by paying $1 million every year as annual rent. There is also an “additional rent” amount of $1.067 million per month”, said IMANI.
Boakye Kwabena Boakye of the ACEP, yesterday told Accra-based Citi FM in an interview that “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 also emphasized the importance of a transparent and competitive bidding process to ensure that the best option is chosen, rather than solely relying on the assumption that TOR is not profitable.#
“In the last year alone, I have seen many companies interested in taking over the asset [TOR]. So open it up, be transparent about it, ask everybody who is interested and say I want $1 million, or I don’t want money, who wants it, and what will you give me in return? And then you have bids that you can compare and choose the best out. The public will be interested in how you do it and agree with the process or disagree with it”.
“You just select someone because you think TOR is not making money and just give the company out in a manner that they are doing, I think raises a lot of red flags and even raises concerns about whether the barest minimum being promised can be delivered. We don’t trace them to any serious company that we can be comfortable with and say we know this reputable company is behind it and for anything at all you can call or shame them.
However, the Senior Staff Union of TOR countered these concerns, stating that Torentco is the only viable option available to revive the refinery, as successive governments have been hesitant to invest capital into its operations.
Under the lease agreement, Torentco Asset Management Group will pay $22 million to lease the Tema Oil Refinery for a period of six years. The company is expected to refine up to 8 million barrels annually.
IMANI had mentioned that “there is also an “additional rent” amount of $1.067 million per month.
It argued that “If Torentco refines more than 8 million barrels, it pays $0.5 for each extra barrel.
“So, if Torentco stretches the refinery to its full limit and refines 16.5 million barrels, it pays $17.2 million in annual rent.
“Torentco will invest $22 million in capital expenditure to revamp the refinery. On top of that, it will assume responsibility for clearing provident fund arrears up to the tune of $2.5 million.
“Torentco will furthermore pay $800,000 into a reserve fund plus $0.4 to cover maintenance expenses for every barrel refined, while assuming responsibility for insurance and utility payments.
“ At maximum production limit, Torentco’s maintenance commitments will cost about $7.4 million and insurance expenses will hit about $6 million per annum.
