Story: Della Russel OclooTHE Tema Oil Refinery (TOR) has shut down its Crude Distillation Unit (CDU) plant following its inability to establish letters of credit (LCs) from its bankers to purchase crude oil for production.
This follows an earlier shut down of the Residual Fluid Catalytic Cracker (RFCC) on June 30, this year.
A highly placed source at the refinery told the Daily Graphic that the CDU plant was shut down about 11:50 a.m. last Monday, moments after workers had finished processing the remaining quantity of crude oil belonging to the Ghana National Petroleum Corporation (GNPC) under a tolling arrangement between the two institutions.
The management of the refinery has, for the past three weeks, been struggling to establish LCs for some $54 million to take delivery of a consignment of 600,000 barrels of crude ordered from Nigeria through an open market arrangement.
The chartered vessel carrying the crude, the Nippon Princess owned by Chakos Shipping Line, is still on dock at the Tema Port awaiting the successful establishment of the LCs to enable it to dock at the single point mooring (SPM) facility for onward delivery.
Indications are that since no single bank can raise the amount, there was the need for three banks to come together to raise the amount to enable TOR to take delivery of the crude oil.
Similarly, a single LC service charge, the Daily Graphic learnt, attracted a 0.7 per cent interest, for which reason TOR would be prompted to pay some 2.2 per cent charge in the event of three institutions forming a consortium.
The source also stated that TOR was yet to retire a previous 90-day LC raised by a consortium of financial institutions for April and May crude deliveries.
That, it said, was a major reason hindering the TOR management's efforts at raising further LCs for the delivery of the consignment.
According to the acting Managing Director of TOR, Dr Alphonse Dorcoo, the refinery's inability to raise the LCs was as a result of an operation framework between the commercial banks and the Bank of Ghana (BoG) that restricted the banks from raising LCs to a certain limit, depending on the business structure.
He stated that although TOR's bankers were willing to raise the LCs, the BoG's regulations were making it difficult to raise the needed amount for the consignment.
'We are not privy to the actual regulation between the banks and the BoG,' he explained.
Dr Dorcoo who described the regulation as a constraint leading to the shut down of the plants, said management was working feverishly to ensure that the LCs went through to enable the discharge of the product.
The intermittent shut down of the two plants has become a major cause of worry for the workers.
The workers expressed worry at the government's incapability to provide a guarantee for TOR to enable the Ghana Commercial Bank (GCB) to raise the LCs to avoid the periodic shut down of the refinery's plants.
They wondered why the government had consistently provided an enabling environment for the bulk distribution companies (BDCs) to import finished products to augment TOR's stock but was unwilling to extend financial assistance to the refinery, although its recovery rate from the oil marketing companies (OMCs) had improved tremendously.
'Just because we do not have crude oil to process, we have to shut down and wait until another parcel is procured,' a source close to the workforce said.
It indicated that apart from the GCB which had the capacity to raise LCs to the tune of $100 million for TOR in the past, other commercial banks were under capacity, considering their limited capital base.
The situation, it said, prompted the consortium to wait until TOR retired earlier LCs before subscribing to another, since the GCB was also unwilling to raise the LCs for TOR, although the government had paid outstanding debts owed it.
'If the government can support us to raise two LCs to cater for adequate crude oil stock, consistent production can be achieved without intermittent shut down of the plants,' the source added.
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