Dr. Mahamudu Bawumia, vice president, has pushed state-owned businesses to aggressively assess their operations in order to fulfill the goals for which they were created and also to make a contribution to overall national development.
A well-focused and -managed SOE is crucial to sustained national development, and it’s important that the Managements and Boards of such entities live up to expectation, Vice President Bawumia said on March 15, 2023, during the commissioning of an ultra-modern Head Office for the Bulk Oil Storage and Transportation Company Limited (BOST) in Accra.
“I was delighted when I was informed that for the first time in ten years, BOST made a profit of GHS 163 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 ensuring their stewardship and prudent Management of resources on behalf of the Government and people of Ghana. This should be the blueprint for SOEs to enable them to contribute to the execution of government policies. Imagine if 100 SOEs each made GHs163 million profit,” he emphasized.
From its inception in 1993, BOST has mostly served as a monopoly in the storage and selling of petroleum products. Nevertheless, in 2004, the government liberalized the industry by establishing privately owned Bulk Distribution Companies (BDCs).
Despite having a large geographic presence all over the country and having assets like storage facilities, pipelines, and marine infrastructure, BOST was unable to fulfill its mandate at some point in its history for a variety of reasons, including the nearly ten-year-long freezing of the BOST margin, which was intended for the development, operation, and maintenance of the company’s storage and transmission infrastructure. This led to a lack of funding for infrastructure maintenance and improvement.
Furthermore, the corporation suffered large operating losses as a result of poor corporate governance and management processes.
According to the documents, BOST has trade obligations totaling USD 624 million as of 2017, legacy loans totaling GHS 284 million, BDC claims totaling USD 37 million, CAPEX liabilities totaling USD 109 million, and GRA tax liabilities totaling GHS 47 million.
Additionally, 30% of BOST tanks had been decommissioned, and 3 of the company’s 6 depots were no longer in use. Additionally, 4 river barges were also inoperable, the entire country’s network of pipelines (361km) was out of commission, and 77 kilometers of 12 inch pipes that had been purchased through a US EXIM facility had been held in Houston for more than 10 years due to contractual issues.
Furthermore, BOST accounting have not had an audit in three years, making it challenging to assess the firm’s financial condition.
But, through the proactivity and major reforms undertaken by the present Board and Management, “I must say, and it deserves to be said loudly, that BOST is now a shining example of an effectively run State-Owned Enterprise” Vice President Bawumia declared.
He continued, “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.
Ekow Hackman, the chairman of the board, made hints about further operational adjustments for the business, including automating BOST depots across the nation.
The new office building was designed in 2014 but has had difficulties ever since. It has 7 stories, a Board Room, office suites, and a 100 lot parking lot.