The Managing Director of the Bulk Oil Storage and Transportation Company Limited (BOST), Edwin Alfred Nii Obodia Provencal says the company requires a capital injection of over US$150million to turn things around in order to make a profit and possibly pay dividends in the next two years.
He said the money will be invested in infrastructural development, bring in products, and settle debts to change the fortunes of the country’s strategic asset in the oil industry, indicating that US$64 million is required to improve upon its infrastructure base including pipelines and storage facilities across the country.
Due to the plethora of challenges, BOST he noted, currently generates annual total revenue of just US$65.20 million, stressing that all other things being equal, the company is projected to generate over US$810 million by 2022 to enhance its balance sheet and create shareholder value.
“The current state of BOST is really an issue of concern; there’s low assets utilization (20%-30%), others assets are dormant-three depots (Bolgatanga, Mami Water and Akosombo) are not operational. Two out of four barges and a tug boat on the Volta Lake have not been in operation since 2012. Tema-Akosombo-Petroleum Pipeline (TAPP) has been idle since 2013. Buipe-Bolgatanga Petroleum Product Pipeline (B2P3) has not been used since 2016. BOST is also battling with low trading activities and margins; it has so far received four cargos in 2019 compared with about 36 cargos in 2016,” he enumerated.
He added that BOST in recent years has been saddled with cash flow challenges emanating from “shortfall revenue generation” resulting in high levels of Legacy and operational trade debts, hovering US$190 million. “Negative GH¢167 million income surplus position per 2016 audited account. About 90% of current Capex is work in progress; about US$47 million required to complete various capital work in progress.”
The BOST MD who made the disclosure during a training workshop for members of the Institute of Financial and Economic Journalists (IFEJ) held at Dodowa in the Greater Accra Region, consequently stated that the required investment will go a long way for the company to fulfil its mandate and increase its market share.
“The Company is looking up to the government for the necessary support of which I know the Ministries of Energy and Finance are working assiduously to support. We are also making efforts to improve upon internally generated funds and consider partnerships with like-minded investors willing to risk their capital investments either on the ticket of BOT or any other viable vehicle to provide the needed resources to turn the company around,” Mr Provencal revealed.
BOST supposed to keep up to 12 weeks of strategic petroleum stocks to ensure the security of supply in the event of any disruption in the supply chain but the company’s reserves can only cater for one week. BOST together with the Tema Oil Refinery (TOR) owns 60% oil storage capacity in the country but the two currently control only 30% of the market.
Established in 1993, BOST as a fully owned Government company is to manage the business of storage and transmission of fuel, focusing on excellence in security, safety and profitability. It has six petroleum demand strategic zones and manages depots located in Accra Plains, Kumasi, Buipe, Bolgatanga, Akosombo and Mami Water with total capacity 425,600 m3.