Vice-President Mahamudu Bawumia has charged State-Owned Enterprises (SOEs) to aggressively review their activities to fulfill the aspirations for which they were established. This, the Vice-President insists, is imperative in sustaining national development.
He also noted that a well-focused and managed SOE is crucial to sustained national development, stressing the need for management and boards of such entities to live up to expectations.
“I was delighted when I was informed that for the first time in 10 years, BOST made a profit of GHC163 million in 2021. It is evident that the turnaround of BOST has taken root. I would like to congratulate the Board, Management, and staff for quality stewardship and prudent management of resources on behalf of the Government and people of Ghana,” he said.
“This should be the blueprint for other SOEs to enable them to contribute to the execution of government policies. Imagine if 100 SOEs each made GHC163 million profit,” he emphasized.
Dr. Bawumia gave the charge when he commissioned an ultra-modern head office for the Bulk Oil Storage and Transportation Company Limited (BOST) in Accra on Wednesday.
Turnaround
The Vice-President acknowledged the proactivity and major reforms undertaken by the present Board and Management, saying “BOST is now a shining example of an effectively run State-Owned Enterprise.”
He added: “I am delighted to state that between 2017 and now, 13 out of the 15 defective tanks have been repaired, all 4 river barges have been fixed, all pipelines which were out of service have been repaired whilst obsolete pumps, meters, and loading arms have been replaced at BOST depots.”
“The result has been an increase in the utilization of BOST’s revenue-generating assets from 34% in 2019 to its current level of 97%. The increase in the BOST margin, from 3 to 6 pesewas per litre in 2019 and subsequently to 9 pesewas in 2020, has contributed significantly to the execution of these projects. The turnaround of the business is significant, and this is demonstrated by the improved operational efficiency,” he noted.
In his contribution, the Chairman of the Board, Ekow Hackman, hinted at even more reforms in the company’s operations, including the automation of BOST depots across the country.
The new office structure, conceived in 2014 but bedeviled by challenges over the years, has seven floors, including a Board Room and office suites, and a 100-lot car park.
Background
Established in 1993, BOST operated mainly as a monopoly in the petroleum products storage and sales business until 2004 when the government liberalized the sector by introducing privately owned Bulk Distribution Companies (BDCs).
Despite its wide geographical presence across the country, with assets such as storage facilities, pipelines, and marine infrastructure, at some point, BOST could not fulfill its mandate due to several reasons, including the freezing of almost a decade of the BOST margin intended for developing, operating and maintaining the company’s storage and transmission infrastructure.
Furthermore, inadequate management systems and corporate governance led to significant operational losses recorded by the company.
The records indicate that as of 2017, BOST was saddled with trade liabilities of $624 million, legacy loans of GHS 284 million, BDC claims of $37million, CAPEX liability of USD 109 million, and GRA tax liability of GHC47 million
Additionally, 30% percent of BOST tanks had been decommissioned, with three out of the company’s six depots being non-operational; four river barges were out of commission; the total network of pipelines (361km) across the country was out of service and 77 kilometres of 12-inch pipes, procured under a US EXIM facility, had been detained in Houston for over 10 years as a result of contractual disputes.
BOST accounts had also been unaudited for three years, making it difficult to determine the company’s financial position.
