The Board Chairman of Bulk Oil Storage and Transportation Company Limited (BOST), Ekow Hackman, has said strict adherence to good corporate governance practices, coupled with a strong determination on the part of boards, management and staff of state businesses to succeed, can help to turnaound their operations for the better.
He said no matter how diffiuclt, it was important to follow due processes and take decisions that inure to the benenfit of the business and not indivudials and groups.
Mr Hackman said this when he led a team to Graphic on August 10.
In the company of the Managing Director of BOST, Edwin Provencal,among others, he interacted with the Editor of Graphic, Kobby Asmah, and his editorial team during which the company’s turn-around story was told.
At the meeting, it emerged that after 11 years of recording losses, BOST managed a remarkable turn-around, recording GH¢163.8 million profit after tax for last year.
The state-owned strategic petroleum storage and distribution company, which was saddled with more than half a billion dollars in debts, has now also been able to clear about 80 per cent of the debts off its books.
In the year under the review, the company recorded total revenue of GH¢1.12 billion, which was almost double the GH¢632 million recorded in 2020.
Out of the amount, GH¢671.6 million came from product sales, GH¢380.4 million came from the BOST Margin, GH¢52.64 million came from storage and rack, GH¢14.83 million came from marine transportation, with GH¢2.07 million coming from products swap.
The Managing Director said when he took over in 2019, the company was saddled with trade liabilities of $624 million.
“This means that some people have brought in products but haven’t been paid for or we traded at a lost so there was no money to pay so we owed suppliers $624 million,” he stated.
He said aside from the debts, the company had taken some guarantees from banks and had legacy loans totaling GH¢284.
In addition to this, BOST also owed some Bulk Oil Distribution Companies (BDCs) to the tune of $37 million for products that had been supplied, coupled with capital expenditure liabilities of about $109 million.
“If you take over a company and instantly people are in court with you and want their money, that looks very scary,” Mr Provencal noted.
However, as of the end of last year, he said the company had managed to pay $611 million out of the $624 million debts it owed suppliers.
Out of the payments, the company’s internally generated funds (IGF) accounted for 70 per cent ($426 million), with the government providing 30 per cent through the Energy Sector Levy Act (ESLA) bond.
“This tells you that the company has huge potential and should not run at a loss,” Mr Provencal stated.
He said out of the GH¢284 million owed to banks, the company had paid GH¢187 million through its IGF.
“It is my hope that by next year, we would have finished paying. It’s a running loan and therefore accruing interest,” he indicated.
He said as the company started paying its debt to the banks, the banks realised that credibility was being restored and some of them decided to extend new credit to the company to bring in products.
“When you owe people and you pay them, it restores trust and confidence,” he said.
With regards to the $37.6 million owed to the BDCs, Mr Provencal said an internal forensic audit undertaken by BOST revealed that the debt was actually $10.1 million and not $37.6 million.
“This one I give it to my predecessors, when they came in, they decided to look into this matter again. So when I came in 2019, there was a committee set up to look into the matter again.
“All I did was to add Economic and Organised Crime Office (EOCO) and the National Investigation Bureau (BNI) to the committee and the result of that internal forensic audit was that $37.6 million became $10.1 million,” he pointed out.
He said BOST had paid down on this debt as well and it was only left with $5.8 million.
Aside from paying down most of its debts through various interventions, the company has also brought back 12 out of its 15 storage tanks, revamped its transmission pipelines and rehabilitated its tugboats and barges, which were all contributing to revenue streams of the company.
Aside from the financial challenges that the company was facing, the Managing Director pointed out that the company was also faced with a huge infrastructure challenge which meant that only 17 per cent of its assets were brought in revenue.
“We had bought some pipelines in 2008 and the pipelines were still in Houston and as of 2019, the pipeline were still there at the mercy of the weather.
“Our pipeline from Tema to Akosombo was out of service, our Bolgatanga to Buipe pipeline was also out of service. Our marine facilities, the barges and the tug boats were not functioning and three out of our six depots were out service but we still had staff going to work,” the Managing Director bemoaned.
He said 15 out of its 51 tanks had also been decommissioned due to lack of maintenance.
“So our assets which could have made us money were all shut down and we had only 17 per cent of our revenue earning assets in operation.
“We also had some tax arrears that we had not paid and our BOST margin was still 3Gp and remained so until 2019,” he said.
Fast forward to 2021, Mr Provencal, who is a management consultant, said the company had now repaired 12 out of the 15 tanks, fixed the pipelines, brought the pipelines from Houston, the barges were all back on track, fixed the jetty, taken out all the old equipment and brought in new ones.
Because of that, he said, the company was now exporting to Mali.
“Our export to Mali has grown from 0.3 per cent in 2019 to six per cent of Malian import of petroleum products in 2020,” Mr Provencal noted.