GHc186m loss is mainly charges on legacy debts – TOR

The Tema Oil Refinery (TOR) says the purported GHc186, 349 million loss incurred in four months by the refinery is mainly charges it incurred on legacy debts.

A statement signed by Mr Daniel Appiah, General Manager-Finance, stated that “the amount in question (GHc186 million) was mainly incurred as a result of financial interest charges and exchange differences on TOR’s outstanding legacy debts yet to be paid from ESLA proceeds; and not due to trading or transactional activities by TOR”.

Mr Appiah indicated that TOR’s total legacy debt as at April 30, 2019 was GHc1.85 billion, after ESLA PLC had paid a total amount of GHc1.1 billion.

Giving the breakdown of the amount, the General Manager-Finance noted that GHc999, 557 and GHc19, 350 were exchange difference and financial charges respectively, of the legacy debts which formed 59.87 per cent of a total of GHc198, 610.

The remaining GHc79,703 which formed 40.13 per cent of the figure was for operational while GHc12,261 was obtained from the figure as ‘less gross profit’ and the said GHc186,349 recorded as the “net loss”.

According to him, as contained in TOR’s internal management report, the refinery made a gross profit in the first four months of this year indicating that “TOR is a potentially profitable company”.

Mr Appiah stated that TOR had been facing some liquidity challenges for some time now culminating in the company’s inability to implement its annual budgets.

“TOR’s revenue targets are not being achieved due to lack of working capital to procure crude oil for processing on continuous basis. However, fixed costs continue to be incurred, “he said.

He added that due to lack of working capital, a number of efficiency-enhancement projects had stalled while some were yet to be started to improve the profitability of the company.