Imani Africa President, Franklin Cudjoe, has questioned the declaration of GHc 35 million in profits by the Bulk Oil Storage and Transport Company Limited (BOST) in 10 months.
He noted that there was no clarification whether the over $335 million debt incurred by previous BOST administrations had been cleared.
Whilst saying he had “no cause” to doubt the claims of the current leadership of BOST in posting a GHC 35m profit in ten months, he said he needed some clarification on exactly what financial strategies were adopted to clear the legacy and current debts of BOST before declaring profit in 2017.”
Mr. Cudjoe explained that, his scepticism stemmed from previous “strange outcomes” at BOST, with respect to the declaration of profits.
“…For instance, on August 11, 2015, the immediate past BOST CEO under the NDC government told Ghanaians BOST made a $21m profit under his able leadership. A couple of months later, on December 20, 2016, we were told BOST had posted a GHC 32m loss.”
“Here we are a year on in December 2017, and a new management tells us BOST has made a GHC 35m profit as a result of great leadership without any details of how almost $335m debt incurred by the previous and current regimes have been paid,” Mr. Cudjoe observed.
In the view of Mr. Cudjoe, it is ultimately “difficult to believe BOST can ever make profits.”
Mr. Cudjoe explained among other things that, this is because BOST’s “truncated mandate has been selling oil products meant to be strategically held in trust for the state, to the public at artificially low prices in its quest to compete with private companies that have been licensed to sell same products at competitive rates.”
Find below his full statement
The Bulk Oil Storage and Transportation Company (BOST) seems to be following in the footsteps of the State Transport Company (STC) in declaring profits in less than a year under their respective leaderships. This is commendable indeed, except, I haven’t seen the dummy cheque from BOST, indicating the total dividends it will be paying to government.
I had witnessed the presentation of a $700,000 cheque by the CEO of STC to the Finance Minister at an event that bemoaned the economic inefficiency of state-owned enterprises in spite of their great potential. Never mind if STC’s successes were in part due to the efforts of the immediate past CEO under the previous government- what matters is the rather open, transparent and efficient manner the challenges of STC were dealt with then and now.
Now, I have no cause to doubt the claims of the current leadership of BOST in posting a GHC 35m profit in ten months. However, I need a little clarification on exactly what financial strategies were adopted to clear the legacy and current debts of BOST before declaring profit in 2017. My recollection of these debts is essentially;
partially unpaid debts of $100m in 2008 incurred due to the sale of Ghana’s strategic oil reserves at below market prices.
Unpaid debts of $235m in 2014 due to the sale of Ghana’s strategic oil reserves yet again at below market prices.
An additional but increasing $100m of trade losses being incurred in 2017 solely due to selling Ghana’s strategic oil reserves at heavily subsidized prices.
You see, there is a history of similar claims by previous managers of BOST only for strange outcomes after a few months. For instance, on August 11, 2015, the immediate past BOST CEO under the NDC government told Ghanaians BOST made a $21m profit under his able leadership. A couple of months later, on December 20, 2016, we were told BOST had posted a GHC 32m loss.
Here we are a year on in December 2017and a new management tells us BOST has made a GHC 35m profit as a result of great leadership without any details of how almost $335m debt incurred by the previous and current regimes have been paid.
Can BOST walk us through how they made a GHC 35m profit in ten months against all the above?
Folks let us face it, it is difficult to believe BOST can ever make profit, when its truncated mandate has been selling oil products meant to be strategically held in trust for the state, to the public at artificially low prices in its quest to compete with private companies that have been licensed to sell same products at competitive rates.
These significant losses in the sale of oil products are politically induced to benefit state assigns. In the end, you and I have to cough up the levies to bail out a wasting state company that should not be trading oil reserves it is mandated to hold for at least six weeks with options to dispose of and replenish stocks without artificially upsetting the market with suppressed prices and changes in the physical properties of oil products.
It seems to me the State Enterprises Commission and the Finance Ministry must take one critical look at BOST and I will not be surprised if they came to the conclusion that the best way to strategically hold oil products in trust for us would be to let private oil companies do so with some financial assurance, because BOST, by its structure and operations easily lends itself to rent seeking and economic atrophy.
Thank you,
Franklin Cudjoe, IMANI.
