The Way Forward For The Tema Oil Refinery

Wed, 10 Nov 2010 Source: Digber, Daniel

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I read with intrigue the challenges the Tema Oil Refinery has been going through. The most recent one is that of the news that Tema Oil Refinery (TOR) has been shut down as a result of salt sea water that flowed into the de-salter.

TOR is a profitable business and can be operated profitably. It is also a strategic national asset that we need to jealously guard and make sure it is operated profitably. There is the need to find out why TOR shuts down frequently or intermittently.

Some of the issues faced by TOR that results in shut down are as follows;

- Technical and operational challenges

- Financial challenges

- Safety concerns

The company is made up the Crude Oil Distillation Unit and the Residue Fluid Catalytic Cracker (RFCC) which are operated to provide processed petroleum products meeting the energy needs in Ghana and potentially some other neighbouring countries.

The challenge with TOR is how it can be brought back to profitability whiles reducing the frequency with which it shuts down and starts up. Currently, TOR has a huge debt piled up and it is also over staffed. Majority of the non technical staff go to the office not having much to do or have a duplicate of activities in the office.

How do we bring TOR to stand on its feet?

Management and leadership will have to develop a strategy to bring TOR back to its feet. There is the need to identify the core activities of TOR and ensure that it focuses on these activities and achieve them. As the saying goes, without a vision my people perish in a similar manner, without a vision, TOR may not focus on its core activities and will still be operated in a non profitable manner. Staff of the company must be made to understand and take ownership of the vision and mission of company. Decisions should not be made for the company by parties who are not working for the company but rather workers should also be part of the decision making process as it goes a long way to affect how TOR is operated. In addition, there is the need to know what will be required to ensure that the current challenges faced by TOR are not repeated.

Government will have to stop interfering in the day to day management of TOR to enable the plant operate to achieve its goals and objectives. There is a management team that has been setup and the government needs to respect the decisions they make believing that the decisions made will have a positive impact on the company. There is the need to have competent staff running the affairs of TOR. It is also rumoured that TOR has several BNI operatives working in the refinery. One really wonders what these security operatives are doing in an oil refinery although the refinery requires security men to protect equipments and finished products from arm robbers and thefts from unscrupulous personalities but not the numbers that have been rumoured about.

There should be an assessment of the human resource needs of the company. A reduction in staff strength will result in the reduction of the huge salary bill of the company especially in the non technical staff department as it is known that the total staff strength is about 900. Regular refresher training programmes for technical staff should be organized to help them operate the various sophisticated equipments in the refinery efficiently. The required technology should be made available to the technical team to work with for them to be more efficient in their operations. TOR should invest in new technology in order to reduce human error that may result in accidents leading to injuries and loss of lives. The current management team will have to be reduced due to the precarious situation the refinery finds itself. For instance some departments can be merged to form one department. There is the need to streamline the activities of staff so that there will be reduction in the duplication of work performed.

Secondly, the financial problems will have to be settled. We need to find out what the debt of TOR is made up of as it is still not very clear what the TOR debt is made up of. TOR owes its creditors very much as a result of government interfering in the marketing of finished products by providing subsidy to the market and not charging realistic fuel prices or ‘dipping its hands’ into the accounts of TOR and using their money for other expenses. Government will have to ensure that it pays TOR when it provides subsidy `and also what it owed TOR to enable the company balance its bank sheets. The accounts of TOR should be clearly separated from government to ensure that TOR is financially independent from government. The financial management of TOR should be clearly separated from Government expenditure. The financial package for staff will have to be reviewed to ensure that staff is well compensated to give off their best as TOR is a high risk operational facility. This is also to prevent poaching of technical staff or technical staff quitting the job for better offers in other countries or industries.

The marketing and distribution of finished products from TOR must be streamlined in order to prevent thefts of petroleum products. Fuel supplied by TOR to Oil Marketing Companies is sometimes supplied on credit basis which TOR needs to stop. All oil marketing companies must pay for the fuel before they are supplied what they request for. In this case ‘money na hand, fuel supplied’.

Finally, safety should be at the core of all the activities of the refinery. An overall assessment of the safety needs of the company will have to be performed. Safety equipments will have to be provided whiles ensuring that safety rules are strictly enforced to the later. The safety policy should be made available to all personnel in the company. Any construction or maintenance to be performed should be properly communicated among technical team and safety department. Regular safety training should be provided to ensure that staff would be up to date on safety issues and also know what to do when there is an accident. In addition, regular safety rehearsals which can be conducted twice in a year with staff to check the preparedness of the refinery in the event of a gas or fire explosion and any other unexpected accident. When safety in the refinery is poor, the premium TOR will pay to its insurance company rises as the risk is higher.

Just as SIC has been managed properly for it to be profitable which is also a government owned company, it is also possible for TOR to be operated for it to come back to profitability. We need to depoliticize the operations of TOR for it to be independent and serve the nation as we all expect if we want it to be a national asset. Alternatively, government can float shares of TOR on the stock exchange so that there will be private investment equity in the business. In that way, it can operate independently and government will not have a monopoly over it. Currently TOR enjoys a monopoly and must desist from complacency as we currently are aware Ghana has discovered oil and there is the potential for foreign investors to come into the country to refine the crude oil we produce from our oil rigs. This may put TOR in a position where it will be in competition with other refineries in the future.

By Daniel Digber


Columnist: Digber, Daniel