Bulk Oil Storage and Transportation (BOST)
Bulk Oil Storage and Transportation (BOST)

Information being gathered by the Economy Times reveals that the Bulk Oil Storage and Transportation (BOST) has been funded by National Petroleum Authority (NPA) and the Ghana National Petroleum Corporation (GNPC) outside their mandates of using their financial resources.

According our source, NPA has injected about US$60 million in BOST in recent times on instructions from Ministry of Finance. The source believes this amount was taken from the Price Stabilization and Recovery Levy in the PBU, but thinks it is breach of the supposed use of such funds to finance BOST.

“I think they are using the Price Stabilization and Recovery Levy in the PBU? I don’t think this is the supposed use of these funds”, the source has said.

But, as to on what basis did NPA release this funds to BOST and what was the use of the funds by BOST is not known yet, the source expressed.

Also, we are told that, GNPC raised US$100million to pay off BOST debts and has not had this released from the Karpower deal mainly because ECG cannot raise GE Guarantee themselves after three years since the Karpower deal became effective.

“GNPC gave BOST US$100million to pay LITASCO/Trafigura on behalf of BOST upon the government’s instruction”, the source noted.

Meanwhile, we are told that BOST still has no strategic stock as at the time of gathering the information.

According industry expert and our informant, this is because government is refusing to put in place the much needed power sector revenue cash-waterfall as Ministry of Energy has been advocating; the inertia is coming from Ministry of Finance.

However, this financing of BOST by GNPC outside its core financial obligations has hampered GNPC’s ability to raise money for the Reserve Account, and also is hampering GNPC’s ability to fulfill its work programme in the long run.

According to information contained in the GNPC 2018 Work Program and addendum presented to the WB the Government of Ghana requested GNPC to secure a US$100 million pre-export facility to be used to pay off the outstanding debts.

“Two of the fuel suppliers involved with the Karpowership arrangement, Trafigura and LITASCO, have at various times supplied petroleum products to BOST and are owed a total amount of about US$100 million, that is US$60 million to Trafugura and US$40 million to Litasco… The payment of the outstanding debt will signal a positive goodwill on the part of GoG. Against this background, GoG has requested GNPC to secure a US$100 million pre-export facility to be used to pay off the outstanding debt.

“GNPC would put in place the necessary arrangement and agreements to ensure that the loan amount and the interest cost will be fully recovered from BOST. BOST has in stock at Tema Oil Refinery crude oil of about US$54 million which has not been processed because of the challenges faced by the Refinery. This stock if monetized, reduces the debt exposure to US$46 million. GNPC will ensure that receivables from the sales of the processed products are used to pay off part of the debt. Any balance outstanding would be recovered from BOST.”

With these occurrences and if nothing positive is realized soon, GNPC’s balance sheet is likely to be impaired by end 2018.

Interview with the former Chief Executive Officer of GNPC, Alexander Mould on the funding of BOST by GNPC and NPA, he indicated that, if true then the government must be careful with abusing the State Owned Enterprises (SOEs) mandated and scope of work.

He therefore called for the publishing of financials accounts by the SOEs in the energy sector.

“We need to let them publish financials as of December, 2016 and December, 2017 for BOST, ECG, VRA, GNPC and NPA”, he stated.

“We need the audited (2016) and management financials (2017) including balance sheets, the income statements, and the cash flow of BOST GNPC GNGC, VRA, Gridco and ECG.

“Also, we need the State Enterprise Commission (SEC) performance contract for BOST, GNGC and VRA to be made public to help promote transparency and accountability in their operattions and management. But, I have that of ECG and GNPC and Gridco”, he retorted to a question on ensuring transparency and accountability in the operations of the energy sector SOEs.

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