Ratings agency, Standard and Poor’s (S&P) has stated that the payment of arrears owed by the Tema Oil Refinery (TOR) to Ghana Commercial Bank (GCB) has helped stabilized the country’s banking sector.
GCB is said to be one of the largest banks in Ghana hence a key player in the industry. It used to give letters of credit to TOR, Ghana’s only oil refiner, to buy crude oil.
At a September 6, 2012 Meet-The-Press series in Accra, Energy Minister, Dr Oteng Adjei announced that the TOR debt has been reduced to GH¢610 million from the December 2008 total of GH¢1.6 billion.
The refiner’s debt in the ooks rose to GH¢1.7 billion at the end of 2009 but the government made an initial payment of GH¢445 million in 2010 to reduce the indebtedness of the state-run company.
“To date government has made payment on behalf of Tema Oil Refinery to the tune of GH¢1, 137,832,874.37. Total outstanding debt is GH¢610,928,790.72,” Dr Oteng-Adjei said during the Meet-The-Press series.
In a statement affirming Ghana’s ratings, S&P today November 21, 2012, indicated that the payment made by the Ghana government has brought stability in the country’s banking sector.
“In doing so, it stabilized the banking sector,” S&P said.
The agency added that nonperforming loans in the domestic banking sector fell from an estimated 17.6% at end-2010 to 14.1% in 2011 and have fallen further to 13.1% in March 2012.
In the quest to find a lasting solution to the perennial financial challenges of TOR, Dr Oteng Adjei during the Accra press briefing indicated that a technical, operational and financial diagnostic review of TOR has been commissioned and the audit has been completed.
The recommendations will be implemented to ensure that TOR operates efficiently and on financially sound basis, he added.
TOR refines about 45,000 barrels of crude per day. Until recently, it has been facing rampant shut downs of some of its key plants.
By Ekow Quandzie
Watch Dr Oteng Adjei on TOR’s debt