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The Board of the Tema Oil Refinery (TOR) said it has held more than 40 board meetings since its inauguration in March 2022, seized with the determination and responsibility to find a robust and sustainable solution for TOR.

According to the Board of Directors, the financial health of TOR has been challenged for a number of years and has subjected the workforce to the misery of having to survive on salaries that have been stagnant over the last five years.

TOR has witnessed the continual exit of key engineering skills in search of productive opportunities in other parts of the world. The board and management are committed to overcoming these challenges and to executing a plan that promises to set TOR on a path to sustained recovery.

This task is complicated by the fact that the TOR Rehabilitation Project is not one that readily attracts many of the established players in the industry. This is especially not helped by the fact that TOR does not have up-to-date audited financial statements, is currently unable to meet all of its financial obligations, and is carrying debt exposure in excess of US$400 million.

However, the Board of the Tema Oil Refinery (TOR) has promised to provide the Office of the Special Prosecutor (OSP) with all the necessary documentation for its investigations into the refinery’s intended deal with Torrentco Asset Management Limited (TAML).

The TOR Rehabilitation Project was tasked to the Board of TOR with a remit to secure a credible solution to return TOR to sustained and profitable refining activity. The refinery has not processed a barrel of oil since April 2, 2021.

For several years, TOR has been unable to meet its operating costs and has found itself reliant on the government to cover its perennial cash flow shortfalls.

The proposed rehabilitation project was to ensure that TOR could sustain itself from internally generated funds and restore the infrastructure at the refinery to allow for the resumption of refining activity on a profitable basis.

More recently, Torrentco has established a special purpose vehicle, Tema Energy & Processing Limited (TEPL), with the express objective of broadening the benefit of the transaction beyond the single Torrentco shareholder.

In so doing, Torrentco sought to establish an entity for the benefit of all the workers of TOR to secure an interest in the lease agreement through a minority shareholding in TEPL. The establishment of this Workers' entity appears to have been done in haste, and the board of TOR has instructed the management of TOR to supervise an engagement between the various workforce stakeholders in a bid to establish clear rules and a governance structure for the proposed Workers' entity.

It is envisaged that proceeds from its shareholding will be applied to various initiatives, such as the refurbishment of the TOR medical facilities, IOR clubhouse. purchase of new company buses, worker training and development, and other broad-based benefits to be identified.

Key financial highlights of the proposed lease agreement are as follows:

TFPL pays:

-Annual Rent US$1million per annum
-Additional Rent US$1.107million per month (US$13.28 million per annum)
-Fixed Maintenance Fee US$423,000 per month (US$5.08 million per annum)
-Variable Maintenance Fee USS3.2 million per annum (based on 8 million barrels of crude oil processed)
-Bonus payment USSO.5/barreI processed beyond 8 million barrels
-Annual utilities/insurance premium USS8 million
-One off payment of US$2.5 million into the TOR provident fund
-If the Lessee fails to meet its ongoing obligations TOR may terminate at its own option
-TOR reserved the right to Early Termination at its own option

Special Prosecutor's Letter

The OSP, in a letter dated November 21, 2023, and addressed to the Managing Director of TOR, Daniel Osei Appiah, said, “It has commenced an analysis of the risk of corruption in respect of the proposed partnership.”

“You are directed to immediately suspend the proposed partnership agreement, ongoing negotiations, operations, and all other ancillary activities arising out of and consequent upon the proposed partnership agreement until you are otherwise advised by the Special Prosecutor.”

As such, the Board of TOR, in a statement issued on Sunday, November 26, 2023, said, “The Board and management of TOR will avail to the OSP any and all documentation required, and we are certain that a better understanding of the issues and processes will allow for this important project to have a chance of being implemented.”

“The alternative would require that TOR continue its ongoing search for viable options in a very difficult market.”

Find attached the full statement