BOST clears 91% of $624m legacy debt

The Bulk Oil and Transportation (BOST) is set to restart operations on a clean slate after the company managed to settle up to 91 per cent of its total outstanding legacy debt of $624 million owed suppliers and related parties.

The debts were cleared through a combination of sources, including government’s support and internally generated funds (IGFs), among others.

Some of the key banks which have been fully paid are GCB Bank which was owed GH¢58.4 million, UBA Bank, $20 million and UMB Bank, $10 million.

Further arrangements are being made to clear the outstanding debt in due course from sources yet to be disclosed.

The Chief Executive Officer of BOST, Mr Edwin Provencal, who disclosed this in an exclusive interview with the Graphic Business, said by managing to clear the outstanding debts, the company was now placed on a sound footing to deliver on its mandate to the “good people of Ghana”.

Audited accounts

Mr Provencal said since 2014, the company’s accounts had not been audited, a practice which did not mean well for a company the stature of BOST.

Subsequently, he said “since the NPP government took over the reins of this country, 2014, 2015, 2016 and 2017 accounts have been audited. The 2018 and 2019 audit is ongoing and is expected to be completed next month”.

He described the practice of auditing accounts of the company as necessary for the image of BOST as an entity which did business with key institutions in Ghana and outside the country, adding that “we need not take our corporate governance practices for granted because this is what provides the critical information to all stakeholders, especially the shareholder and potential investors to be able to gauge our business risk”.

Achievements since 2017

Mentioning some of the key achievements made in the last few months, Mr Provencal began with BOST’s marine assets, saying “a tug boat which had not been utilised since 2015 and two of the four river barges that were grounded are back in operation on the Volta Lake for fuel transport from Akosombo to Buipe”.

He also reiterated the fact that the restoration of the marine assets had also helped resuscitate the Volta Lake Transport Company (VLTC) which was almost out of business since a huge chunk of their (VLTC’s) fortunes depended on business from BOST.

“This has curtailed a looming shutdown of VLTC and saved hundreds of jobs,” he said.

On the claims from Bulk Oil Companies (BDCs), he said “BDCs’ lost product claims have been reviewed downwards by an in-house committee from $36 million to $15 million”.

Mr Provencal said the Tema Akosombo Petroleum Pipeline (TAPP) rehabilitation project had also been restarted, adding that “mobilisation amount of $534,000 has been paid to the contractor and they are currently on site with an estimated time to complete around June 2020”.

He emphasised that the use of the pipeline, which was the cheapest mode of transport, would help improve the cost efficiency of the company.

Depot upgrade

On BOST’s depot upgrade, Mr Provencal said a meeting with the contractor was held in South Africa two months ago to plan a restart of the depots upgrade project.

“This contract was signed in 2015 and still pending due to lack of funds. The project, when executed, will help improve the operational efficiency of BOST, hence its competitiveness. An initial amount of $1 million has been committed to the restart of the project,” he said.

As part of measures taken by the company to restore its lost glory in the market, Mr Provencal said the depot upgrade was meant to increase flow rate from 900 litres per minute to 2,400 litres per minute from the fourth quarter of the year.

He said BOST was aware of the fact that growth in petroleum consumption in the country was expected to increase by four per cent year-on-year. This demand growth is what has informed our forecasts for 2020 and subsequent years.

BOST Margin to mitigate infrastructure risk

Mr Provencal called on all stakeholders to support the increase of the BOST Margin levy of GH¢0.03 per litre to at least GH¢0.06 to ensure efficient running of the organisation.

The BOST Margin levy was put in place solely to assist BOST in the maintenance of its facilities. The BOST storage and transportation national infrastructure is the largest in the country. To deliver the BOST mandate, it is forced to run at very high operational costs, unlike its competitors who will site their operations at the most profitable locations.

“Our non-performing assets stand at almost 35 per cent and adequate resources are needed to turn this situation around for the good people of this country,” he said.

“The current BOST Margin of GH¢0.03 ($0.0183) was implemented in 2011 and has not been adjusted even though the presidential commission in 2017 recommended strongly its upward adjustment to GH¢0.06. We are in 2020 and the levy is still pegged at GH¢0.03 ($0.0050), an erosion of almost 75 per cent of its value due to depreciation and inflation,” he said.

“To maintain the same dollar value in 2011, the margin has to be increased to GH¢0.12. Is it right for Ghanaians to expect optimum execution of the BOST mandate with this kind of support?” he lamented.

Going forward

“With the restoration of our dormant assets via the BOST Margin adjustment, coupled with efficient operations, we strive to achieve at least 70 per cent tank utilisation. We will also fully operationalise the other two additional 1,800m3 barges by 2024,” Mr Provencal said.

He said measures were also underway to install and operationalise the 12-inch pipeline between Tema to Akosombo Pipeline (TAPP) to meet the increased demand by 2024.

He said the operationalisation of the B2P3 pipeline and TAPP would ensure pipeline utilisation of up to 80 per cent.

All those, he said, were initiatives meant as part of a grand BOST strategy to drive value for the shareholders, that is the government and other stakeholders.