The Ministry of Finance in Ghana is set to write off approximately $120 million of the Tema Oil Refinery's (TOR) legacy debt. This move is part of efforts to alleviate the financial burden on the state-owned refinery. The Managing Director of TOR, Edmond Kombat, disclosed this information during a working visit by Parliament's Energy Committee. The legacy obligations of TOR currently stand at around $400 million.
According to Mr. Kombat, the refinery's legacy debts were reduced through a debt restructuring exercise. The first phase of the restructuring brought down the debt to about $400 million. The Ministry of Finance plans to include the proposed write-off in the 2026 budget. This would further reduce TOR's outstanding liabilities. The write-off is expected to have a positive impact on the refinery's financial situation.
Despite the planned write-off, TOR still owes substantial amounts to both private companies and state institutions. Private creditors include Sahara and BP, with management negotiating possible discounts on outstanding amounts. Mr. Kombat mentioned that TOR owes the Ghana National Petroleum Corporation (GNPC) and the Volta River Authority (VRA). He appealed to Parliament's Energy Committee for support in resolving these outstanding obligations.
The Managing Director of TOR expressed the need for Parliament's assistance in resolving the refinery's debts to state institutions. He emphasized that TOR's management is working to negotiate with private creditors. The committee's support is crucial in helping TOR to net off its debts to GNPC and VRA. This would enable the refinery to focus on its operations.
TOR's legacy debt has been a longstanding issue. The refinery has struggled with financial challenges, affecting its operations. The planned write-off by the Ministry of Finance is expected to provide relief. The 2026 budget will include the proposed write-off, which will help reduce TOR's debt.
The Energy Committee's visit to TOR was aimed at assessing the refinery's current situation. The committee was briefed on TOR's financial challenges and the efforts being made to address them. Mr. Kombat's disclosure of the planned write-off was part of the briefing. The committee's support is essential in helping TOR to overcome its financial difficulties.
The write-off of $120 million of TOR's legacy debt is a significant step towards resolving the refinery's financial challenges. The move is expected to ease the financial burden on TOR. The refinery's management will continue to negotiate with private creditors and seek support from Parliament to resolve outstanding obligations.
Key points
- The Ministry of Finance plans to write off $120 million of TOR's legacy debt.
- TOR's legacy obligations currently stand at around $400 million.
- The refinery still owes substantial amounts to private companies and state institutions.
