The Tema Oil Refinery (TOR) is expected to raise funds to finance its debt and expand its facilities, with the use of the Ghana Petroleum Mooring System (GPMS) as a Special PurposeVehicle (SPV), a finance committee report of Parliament has stated.
It is also expected to increase the value of GPMS, enabling TOR to raise the maximum amount of funds to contribute to its solvency.
Parliament on Wednesday evening approved a tax exemption estimated at US$46million for the waiver of import duties and corporate income taxes on the operations of the SPV for the management and operation of the mooring facility at Tema.
According to the Committee report, the waiver is in respect of the operation, maintenance and expansion of the Tema Offshore Mooring System by the SPV for a 15 year concession period.
Details of the waiver include import duties,import VAT and NHIL, ECOWAS Levy,EDAIF, Inspection Fees, Corporate Taxes,Withholding Taxes and other applicable imposts for the GPMS on goods and services to be procured in respect of GPMS’s Design and Build Contractor for the new Single Point Mooring(SPM) under the operation and expansion of the Tema Offshore Mooring System.
The Finance Minister, Seth Terkper had told the Committee that the waiver was necessary to support the current restructuring on-going at TOR. He explained that TOR has restructured its principal debts with the banks into a 10-year zero coupon bond.
Furthermore, the report indicates that interest on the bond is currently serviced from its share of the Energy Levy. However, TOR is required to deposit US$42million with the participating banks by 30 November 2016.
The amount is the present value of the bond principal and will be used to pay off the principal debts on maturity of the bond.
The US$42million will be raised from the sale of the shares in GPMS which is only feasible when the required taxes are waived.
According to the Finance Minister, funds to be raised in excess of US$90million which is TOR’s immediate requirement will be applied for servicing part of TOR’s debt.
“Granting the waiver will also help TOR and its equity partners to further leverage the concession to raise fresh capital to refurbish the facility and build a new Single Point Mooring (SPM) of up to 200,000MT capacity”, the report indicated.
The SPM facilitates the convenient handling of large vessels, petroleum and oil products.
In 2004, government entered into a 10-year concession agreement with TrafiguraBeheer BV, for the development and operation of offshore mooring facilities in Tema on a Build-Operate-Transfer (BOT) basis.
It formed part of government’s efforts to significantly improve the nation’s capacity to refine light crude oil at TOR and also direct the import of refined petroleum products to complement the output from TOR.