TOR closes down again over crude oil shortage

• Posted on June 25, 2018
• by Ellsamwise King
• Comment

The Tema Oil Refinery (TOR), has shut down again following a shortage of crude oil at the facility.

The refinery, which has the capacity to refine about 45,000 barrels of crude oil a day, has been operating below capacity for some time now.

Confirming the shutdown to, the Executive Director of the Institute of Energy Security, Kwasi Anamua Sakyi, explained that TOR is unable to raise its own letters of credit to acquire crude oil.

“From the desk of IES, what we are picking is that they have run out of crude oil. Last two weeks ago, the primary plant, being the crude distillation unit was shut down for lack of crude oil so the atmospheric residue that was installed was still being fed into the RS 50…That also got finished last week and the plant had to be shut down as well, so both the CDU and the RCC as we speak are down.”

“There is no feedstock. The information we are picking is that TOR is having challenges with the suppliers to feed them with the crude oil that is required to run the plant.”

Privatize TOR 

Mr. Anamua Sakyi advocated that TOR must be privatized to reduce the level of inefficiencies in its operations.

“We are calling for private participation because the money to invest in the refinery is quite huge. For instance, you know that we are moving to a lower Sulphur grade in Africa and it requires that the refinery desulphurized its system.

“Introducing this de-sulphurising unit alone will cost more than $120m. Apart from that, they need to introduce  new boilers, they need to introduce additional furnace, and so investment must get to an optimum level where they can say it is running well  and it can give us more money.”

‘Tank farm saga’

The Energy Minister; Boakye Agyarko at a conference in the United States recently, had indicated that government intends to turn TOR into a tank farm, ahead of the construction of a new refinery in the Western Region.

In May 2018, the Energy Minister disclosed that the government had prepared land in parts of the Western Region for investors interested in such venture to set up in a free zone enclave.

He explained that potential companies that would take advantage of this opportunity would enjoy enormous benefits, including tax breaks and would also be required to export their products.

But some critics have rejected the proposal.

TOR debt recovery levy

The government instituted the TOR Debt Recovery Levy in a bid to clear the massive debt that hanged on TOR as a result of under-recoveries.

In 2015, TOR’s debt was estimated to be in excess of 1.9 billion.

The Debt Recovery Fund Levy Act 2003 (Act 642) was passed to help finance TOR’s accumulated debt and cater for the companies under recovery.

Due to this, a debt recovery levy was subsequently imposed on some petroleum products.

TOR debt overpaid; stop levying Ghanaians – ACEP

The Africa Centre for Energy Policy (ACEP) in 2016 charged the government to stop taxing Ghanaians over the TOR Debt Recovery Levy since their investigations had shown that technically, the “debt has been cleared and even overpaid.”

ACEP said at the time the levy was instituted, the total debt stood at GHc450 million.

The center argued that if for any reason the debt had not been cleared, then the government is to blame for either mismanaging the levies or for non-compliance.