TOR Risks Sanctions

The Tema Oil Refinery (TOR) faces a high risk of sanctions if it continues to do contrary to relevant laws and covenants.

It has been revealed that procedures or systems for identifying and monitoring compliance with relevant laws and covenants at the refinery are inadequate.

This inadequacy has contributed to a number of instances of non-compliance with relevant laws including environmental laws, the Companies’ code, the Insurance Law among others on he part of the Refinery, the report of the forensic audit conducted into TOR has revealed.

The report, which is yet to be published, stated that there is also evidence of non-compliance with contractual obligations like, required financial ratios under the Credit Agreement between TOR and Samsung for the Residual Fluid Catalytic Cracker (RFCC) project financing.

“Our observations also include the absence of a Corporate Code of Ethics at TOR embodying the company’s policy statements on social responsibility issues such as environmental awareness, anti-discrimination etc,” the report stated further.

According to the report, the Tema Oil Refinery had not had specialized legal advice in the last ten years. However, no proper arrangements had been put in place to ensure that such advice was obtained when needed. As a result, TOR had been committed to major capital expenditures over the years without prior board approval. These include the award of contracts to; (i) UBS for hedging of TOR’s crude oil imports and sale of finished products, (ii) WRESPO for the supply, installation and commissioning of a 60-ton/hour boiler at a contract price of US$8.4 million (iii) Motherwell for the supply, installation and commissioning of three storage tanks at a contract price of US$6,347,792 (iv) Johnston Pipes for the supply of GRP pipes for the replacement of bonna pipeline from Tema Habour to the refinery at a cost of 693,268.71 pounds sterling.

In spite of the directive from the board that all capital expenditures should necessarily be referred to it for approval, the Tema Oil Refinery was found involved in the above instances of non-compliance.

The Refinery according to the report, has failed woefully to comply with relevant legislation, a situation that endangers the operations of the refinery.

The Registrar of Companies by a letter dated 27th September 2001, indicated that TOR had failed to file annual returns for the years 1996, 1999 and 2001, in contravention of section 122 (1) of the Companies Code 1963, (Act 179). This makes every officer of TOR, (directors, company secretary) liable to pay a fine not exceeding five pounds for everyday of the period from 1996 through 2001.

Again, the Environmental Protection Agency (EPA) has observed that levels of conductivity, oil and grease discharged by TOR’s operations are persistently well above EPA guidelines. TOR has also failed to submit Annual Environmental Reports as required by law.

The report warned that if the situation is not remedied, the refinery could face suspension, cancellation or revocation of its environment permit and/or fine.