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TOR for Sale   
 
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24-Sep-2009  
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The Tema Oil Refinery (TOR), the only refinery in Ghana, may be slipping through the fingers very soon following advanced plans by the government for its divestiture.

Even though government officials had for several months denied the allegation of plans to offload TOR, documents chanced upon by Daily Guide reveal that the state owned property is at the verge of losing that status.

This intention was made known by the Minister for Finance and Economic Planning, Dr Kwabena Dufuor, recently in a document sent to the President.

According to the document, dated 7th September, 2009 and which was copied to the Chief of Staff, the Office of the President, and other stakeholders, the ministry has exclusively mandated Ecobank Development Corporation and Ecobank Ghana Limited (acting as transaction advisors) to prepare the way for what it called ‘the eventual privatisation’ of the refinery.

The Mills Administration is struggling to recapitalise TOR, as it has not been able to import a drop of petrol for the company since it came to power, over-exposing its main creditors, Ghana Commercial Bank (GCB).

TOR owes GCB over GH˘900MILLION, in addition to other liabilities to some other banks. Attempts to import crude from Nigeria and Libya have hit brick wall, with President Atta Mills now turning his attention to Venezuela in South Africa.

The President, who is currently attending the United Nations General Assembly in New York, is expected to visit the oil-rich South American country, with cup in hand to beg for crude oil from President Hugo Chavez. Kwesi Pratt, a friend of Hugo Chavez, has taken the lead to prepare the ground for President Mills in Caracas, Daily Guide has learnt.

The ‘sale’ comes at a time when the country is gearing up to become an oil exporter in the next couple of years. ‘Pursuant to Government’s decision to restructure and capitalize the Tema Oil Refinery (TOR), the Ministry of Finance and Economic Planning hereby grants Ecobank Development Corporation and Ecobank Ghana Limited (together referred to as ‘Transaction Advisors) the exclusive mandate to assist MOFEB, Ministry of Energy (MOE) and TOR (the client) to undertake the assignment on the following terms and conditions and in accordance with the agreed timetable outlined in the Technical Assistance Proposal,” the letter said.

The scope of the mandate, given by the minister, include establishing and confirming the state of TOR, arrangement and syndication of $300million to re-finance the refinery’s debt, arranging for additional funds to make up for any financial gaps identified, as well as leading and managing the eventual privatisation of TOR.
As part of the remuneration terms, TOR will pay Ecobank a total of $1 million in two installments, plus a success fee of 2 percent of the total amount raised.

A non-disclosure clause in the mandate letter further permits the transaction advisors not to publicly disclose whatever service or advice it provides, unless compelled by law.

TOR had been entangled in series of financial crises since 2007, for which reason the previous government reportedly contemplated privatizing it, but was shelved after the country discovered large volumes of crude oil later that year. When the sale issue leaked into the media a couple of weeks ago, it was vehemently denied by politicians in the current administration, in spite of glaring indications that negotiations were far advanced to that effect.

The move was condemned by a number of politicians, including the NPP Member of Parliament (MP) for Asikuma Odoben Brakwa, P.C. Appiah Ofori.

“TOR is the only refinery in the country, and as at now, the only legacy Ghanaians can claim to possess as the legacy of Osagyefo Dr Kwame Nkrumah’s dream of establishing Ghana as an industrial giant in Africa, besides the Akosombo hydro election dam,” he wrote to Parliament.

Currently, only the Oil Marketing Company (OMCs) are keeping the wheels of the economy running by importing refined oil into the country. Ecobank Development Corporation is the investment branch of a Lome-based lending company, and was co-adviser on Ghana’s $570 million sovereign bond, and the lead adviser in the sale of Ghana Telecom (GT) to Vodafone.
 
 
Source: Daily Guide
 
 

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