Ghana’s Minister of Public Enterprises, Joseph Cudjoe, announced that the government, through the Ministry of Energy, is actively receiving and reviewing proposals from potential strategic investors to restructure the Tema Oil Refinery (TOR). Speaking to Citi News, Cudjoe emphasized the critical need to revitalize TOR, Ghana’s sole refinery, which has been grappling with significant operational and financial challenges. “At the moment, the Ministry of Energy is receiving proposals from potential strategic investors for restructuring,” he stated, highlighting that these investors are expected to provide the necessary capital, technical expertise, and advanced technologies to restore the refinery’s functionality and efficiency, per.
TOR’s Persistent Operational Struggles
The Tema Oil Refinery, established as Ghana’s first and only refinery, has a designed capacity to process 45,000 barrels per stream day but is currently operating at a reduced output of approximately 26,000 barrels daily, per. This underperformance stems from a combination of outdated infrastructure, insufficient maintenance, and financial constraints that have plagued the facility for years. “It is not operating at the level it is expected to operate at,” Cudjoe acknowledged, underscoring the urgency to address these issues to meet national and regional energy demands. The refinery’s inefficiencies have led to Ghana’s heavy reliance on imported refined petroleum products, exposing the country to volatile global fuel prices.
Advocacy from Civil Society
Civil Society Organisations (CSOs), including the Chamber of Petroleum Consumers (COPEC) and the Africa Centre for Energy Policy (ACEP), have been vocal in urging the government to prioritize TOR’s revival. COPEC, in particular, has consistently advocated for upgrading the refinery to its full capacity, arguing that a fully operational TOR could stabilize domestic fuel prices and reduce the economic burden on Ghanaians. “When the capacity of TOR is built, it would be able to help cushion Ghanaians when fuel prices on the global market go up,” COPEC stated, per. This sentiment is especially relevant in 2022, as global fuel price surges, driven by geopolitical tensions and supply chain disruptions, have increased costs for import-dependent nations like Ghana.
Role of Strategic Investors
The government’s strategy hinges on attracting strategic investors capable of injecting significant capital and expertise into TOR. Cudjoe outlined that these investors would bring “necessary funds, technical expertise, and technologies” to modernize the refinery, improve its operational efficiency, and align it with contemporary industry standards, per. The involvement of private sector partners is seen as a pragmatic approach to overcoming TOR’s financial limitations, which have historically hindered its ability to compete in the regional energy market. The restructuring aims to position TOR as a viable entity capable of refining crude oil to meet domestic demand and potentially serve as a hub for West African markets.
Economic and Strategic Implications
Revitalizing TOR is critical for Ghana’s energy security and economic stability. A fully operational refinery could reduce the country’s import bill, which reached $2.5 billion for petroleum products in 2021, per the Bank of Ghana. By increasing domestic refining capacity, TOR could mitigate the impact of global price volatility, providing relief to consumers facing rising fuel costs. Moreover, a revitalized refinery would create jobs, boost local industries, and enhance Ghana’s position in the regional energy sector. The government’s openness to private investment reflects a broader shift toward public-private partnerships to address inefficiencies in state-owned enterprises.
Challenges and Next Steps
While the call for proposals marks a proactive step, details about the potential investors, the scope of their involvement, and the timeline for implementation remained undisclosed as of May 2022, per. The government faces the challenge of ensuring transparency and accountability in the selection process to avoid past criticisms of mismanagement at TOR. Additionally, the refinery’s aging infrastructure requires significant upgrades, which could demand substantial investment and time. The Ministry of Energy’s review process will be crucial in identifying partners capable of delivering sustainable solutions to TOR’s operational woes.
Broader Context and Expectations
The push to restructure TOR aligns with Ghana’s broader industrialization agenda, including initiatives like One District, One Factory (1D1F), which seeks to promote economic diversification. TOR’s revival could serve as a cornerstone for these efforts, supporting industries reliant on petroleum products. However, public skepticism persists due to previous failed attempts to revive the refinery, including stalled partnerships and financial losses reported in 2021, per. The government’s commitment to engaging strategic investors signals a renewed effort to address these challenges, with the hope of restoring TOR as a vital asset for Ghana’s economy by leveraging private sector innovation and resources.
