GRi Business, Economics &
Finance 16 – 01 - 2003
Accra (Greater Accra) 16 January
2003- Total petroleum sector or Tema Oil Refinery (TOR) debt is expected to stand at more than 4.5
trillion cedis at the end of December last year.
This is made up of medium term
bonds of 4 trillion, 25bn and 563m cedis (4,025,563,000,000) plus TOR
non-recovery of 500bn cedis (500,000,000,000).
"The total petroleum sector
or TOR debt is therefore, expected to stand at 4,525,563,000,000 cedis," a
statement signed by Dr J.K. Richardson, Chairman of the Interim Management
Committee of TOR, said on Wednesday.
Giving details about TOR's debts, the statement said the refinery's debt was
accumulated largely between 1999 and 2000 because the ex-refinery prices did
not permit it to recover costs in full.
"The total debt as at
"An amount of 1.1 trillion
cedis was owed to 'creditors', specifically to cover letters of credit for
crude oil and product purchases which had not yet matured and were believed by
TOR to be the direct responsibility of the government.
"This amount was
unfortunately not reported to the new government at that time." The
statement said the government became aware of this huge encumbrance in
2002 on
detailed examination of the audited account of the company for the year 2000.
It said fuel price increases of
2001 were not implemented until late February of that year. "Consequently,
there were almost two more months of under recovery of costs totalling 207
billion cedis."
The statement said total debt
therefore at the end of February 2001 was 3,392,563,000,000 cedis. This was made up of 2,104,500,000,000 in bank
overdrafts and loans, 1,080,748,000,000 owed creditors and 207,315,000,000 being
the shortfall for January and February.
The statement said this debt has
increased since February 2001 due to interest charges. The interest charges,
TOR said, is in two parts. In the first part, the government has managed to
convert 2.4 trillion cedis to Medium Term Bonds as at the end of December 2002,
removing the amount raised by the Bonds from the TOR balance sheet. The
interest charges on these Bonds have until now been absorbed by the government.
In the second part, accrued
interest charges on the non-converted debt of TOR were 327bn cedis in 2001 and
372bn in 2002, giving a total of 699bn cedis. On "windfall profit",
the statement said the ex-pump increase of 2001 was based on a per barrel crude
oil price of $28 without taxes.
"In order to reduce the
impact of the increase, the government decided not to factor on the full taxes
due at the time." The statement said as crude oil prices fell in 2001, the
taxes due were sequentially applied until the government taxes were fully charges
when crude oil prices reduced to $19 a barrel.
It said further savings due to
the continued low crude oil prices were made during 2001 and early 2002. These,
it said, totalled 66bn in 2001 and were applied to pay part of the interest
charges due on the debt.
In 2002, there were
"windfall profits" of 30bn cedis which part offset the non-recovery
of the costs in that year. The statement said the debt at the end of December
last year, excluding under recovery for the year, was four trillion cedis made
up of the principal debt of 3,392,563,000,000 of which 2.4 trillion cedis was
converted to medium term bonds, interest charges to TOR of 699,000,000,000
totalling 4,091,563,000,000.
This figure less the windfall
profits of 66 billion cedis brought it to 4,025,563,000,000 cedis. The
statement said during 2002 crude oil prices started rising once again, with
dramatic increases in the latter part of the year because of the events in
"Consequently, there was an
under recovery by TOR by the ex-refinery level of an aggregate of 269bn cedis
to end September 2002, estimated to be 500bn cedis by the end of December 2002.
This brings the total TOR debt as at the end of last year to 4,525,563,000,000
cedis.
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The source said the increase to
be announced by the end of the week, would also affect other petroleum
products. Speculation of an imminent increase in fuel prices had led to
shortages in
While the fuel dealers said the
refinery was not meeting their demands, officials of the ministry have said the
refinery was pumping out its normal supplies. They blame the dealers for
hoarding fuel in anticipation of an increase so as to reap a windfall.
There have been heated public
debates on a fuel price increase. Although there is a general agreement that
the prices are low, there is disagreement about the percentage increase since a
fuel price hike affects the prices of goods and services.
The government had said
repeatedly that it could no longer maintain the low prices in the face of
rising crude oil prices and depreciating currency. The cost of a barrel of
Brent Crude is $32, up from $19 in 2001 while the exchange rate to 8,800 cedis
to the dollar as against 7,050 cedis as at March 2001. These had led to huge
debt incurred by the Tema Oil Refinery (TOR).
Ex-pump prices in
This was made up of medium term
bonds of 4 trillion, 25bn and 563m cedis (4,025,563,000,000) plus TOR
non-recovery of 500bn cedis (500,000,000,000). Giving details about TOR's debts, the statement said the refinery's debt was accumulated
largely between 1999 and 2000 because the ex-refinery prices did not permit it
to recover costs in full.
"The total debt as at
"An amount of 1.1 trillion
cedis was owed to 'creditors', specifically to cover letters of credit for
crude oil and product purchases which had not yet matured and were believed by
TOR to be the direct responsibility of the government.
"This amount was
unfortunately not reported to the new government at that time." The
statement said the government became aware of this huge encumbrance in 2002 on
detailed examination of the audited account of the company for the year 2000.
It said fuel price increases of
2001 were not implemented until late February of that year. "Consequently,
there were almost two more months of under recovery of costs totalling 207bn
cedis."
The statement said total debt
therefore at the end of February 2001 was 3,392,563,000,000 cedis. This was
made up of 2,104,500,000,000 in bank overdrafts and loans, 1,080,748,000,000
owed creditors and 207,315,000,000 being the shortfall for January and
February. The statement said this debt has increased since February 2001 due to
interest charges.
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Ho (Volta Region)
He said it was better for
somebody whose foot was pricked by a pin to bear the pain of having it pulled
out than wait for the foot to rot and be amputated. Major Quashigah
who was speaking at the Peoples Assembly in Ho on Monday said the decision
might hurt now but it is better now than later.
"It makes no economic sense
for
The large audience, which packed
the Ho District Assembly Hall, were visibly delighted when Major Quashigah in an answer to a call for salary hikes for
workers invited Steve Akorli, Member of Parliament
(MP) for Ho-East, to say what percentage salary increase an NDC government
would have granted in the circumstances.
In reply, Akorli
contended that the anticipated fuel price hike coupled with tax increases
necessitated about 50 percent increase in salaries. Major Quashigah,
however, said the bloated Civil Service was a hindrance to salaries management
in the Public Service.
He said government was up to the
task and would pursue policies with the comfort of Ghanaians in mind. Issues
addressed at the Assembly included the Aveyime Rice
Project, the Aveyime Ranch and the inability of some
communities to pay commitment fees for water projects.
Others are the poor state of Ho
town roads, the Sogakope-Adidome-Fume road and the
northern sector roads. Kwasi Owusu-Yeboa, Volta
Regional Minster said the two roads leading to the northern part of the region,
Kpando-Worawora-Dambai and Hohoe-Breweniase-Nkwanta
roads would be done in phases.
Mawutor Goh,
Ho District Chief Executive announced that five billion cedis had been provided
for roads in Ho. He explained that modifications to the previous project to
include pavements and culverts which were not part of the original contract and
the withdrawal of one of the contractors for the job created problems that were
being tackled.
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Saltpond (Central Region)
The Commission has also decided
to set up a plant pool to offer the needed support to investors who want to go
into salt production. Foster Forson, Executive
Director of the Commission announced at a meeting with some stakeholders from Ekumfi Traditional Area at Saltpond.
The meeting was convened at the
instance of CEDECOM to sensitize the stakeholders on prospects of salt
production. Forson said
He said the country (
Forson said the Commission was in link
with Tractor and Equipment of the
The executive director appealed
to land owners to offer lands on very reasonable terms to the Commission or
investors. He however, cautioned Ghanaians who act as front men to foreign
investors to refrain from exploiting their countrymen and women by offering
them unreasonably low cost for their lands.
Forson also cautioned both Ghanaians and
foreign investors who exploit the Minerals Commission by under valuing the
acreage of lands acquired in order to pay fewer levies on them to desist from
the practice.
Kofi Wilson, the Mfantseman District Chief Executive urged the people to
take advantage of the investment opportunities open-up to the district to get
out of the vicious poverty cycle.
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President Kufuor, welcoming the
delegation told them: "The NPP government is your government, which is
determined to support the private sector." Mrs Elizabeth Joyce Villars, President of the Association of Ghana Industries
(AGI), who led the delegation, said it had been their desire to have a meeting
with President Kufuor.
She said it was good to
establish good rapport and better working relationship in their joint efforts
for national development. The Foundation is made up of six organizations - AGI,
Federation of Associations of Ghanaian Exporters (FAGE), Ghana National Chamber
of Commerce and Industry (GNCCI), Ghana Employers' Association (GEA), Ghana
Association of Bankers (GAB) and Ghana Chamber of Mines (GCM).
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Association of Ghana Industries
(AGI), on Wednesday said Ghanaian entrepreneurs had no reservations about the
government's commitment to the private sector.
She said President John Agyekum
Kufuor had given them all the assurance of his involvement with the sector and
there were visible signs that the government was friendly to the sector.
Mrs. Villars
was briefing newsmen after she led the 16-member Governing Council of the
Private Enterprise Foundation (PEF) to a meeting with President Kufuor at the
Castle, Osu.
The Foundation is made up of six
organizations - the AGI, Federation of Associations of Ghanaian Exporters
(FAGE), Ghana National Chamber of Commerce and Industry (GNCCI), Ghana
Employers' Association (GEA), Ghana Association of Bankers (GAB) and Ghana
Chamber of Mines (GCM).
It co-ordinates and harmonises
activities of member associations in the sector. Mrs Villars
said some of the visible signs were stabilization in the micro economy,
reduction of inflation as well as low interest rates.
She said deliberations at the
meeting centred on issues to create the enabling environment for the sector to
be able to work together with the government to make
On the impending increases in
fuel prices, Mrs Villars said government should
increase the prices and leave the choice to the individual to decide whether to
use his/her own vehicle or join the mass public transport or any other means of
transport.
In an answer to a question, the
President of AGI said it was better to have a reliable and constant supply of
energy than to use a generator. She said increases in salaries and wages should
correspond with increased productivity to meet the demands of the sub-region.
Kwabena Agyepong,
Press Secretary to the President and Presidential Spokesman, said the meeting
was held in a frank and cordial atmosphere. He said government would ensure
that all the necessary inputs were put in place to ensure that the private
sector performed creditably.
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UNIL, which was up by 42 cedis,
was one of three gainers on the bourse where the GSE All-Share Index went up by
1.64 points at 1,415.86 points. Despite the gain, institutional investors
continued to stay away as only 34,300 shares changed hands, down from 157,500
shares.
Only six equities sold shares
with British American Tobacco (BAT) selling the highest number of 14,800. UNIL
ended the day at 4,850 cedis, Ghana Commercial Bank gained four cedis at 3,610
cedis and SSB bank gained one cedi at 4,102 cedis.
Market capitalisation was up at
6,349.05 billion cedis from 6,345.70bn cedis on Monday. Change for the year was
1.64 per cent.
The following are the last
prices of listed equities in cedis:
ABL 390
AGC 28,000
ALW 3,700
BAT 1,001
CFAO 67
EIC 4,600
FML 1,800
GBL 500
GCB 3,610 +4
GGL 1,100
HFC 1,000
MGL 254
MLC 272
MOGL 19,730
PAF 750
PBC 390
PZ
2,010
SCB
28,700
SPPC 387
SSB 4,102 +1
SWL 285
TBL 4,850
UNIL 4,850 +42
CMLT 460
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Currency Buying Selling
U.S. Dollar 8,318.00 cedis 8,517.73 cedis
Pound
Swiss Franc 5,989.65 6,133.94
Canadian Dollar 5,393.13 5,523.33
Danish Kroner 1,179.40 1,207.80
Japanese Yen
70.42 72.14
South African
Euro 8,763.62 8,975.14
CFA Franc 13.36 13.68
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