The Management of the Bulk Oil Storage and Transportation Company, BOST, is confident its agenda to turn around the fortunes of the loss-making entity is on course following its ability to fully settle a 12-year old credit facility contracted from GCB Bank.
The loan sourced from GCB in 2008 has been in arrears and attracted several penalties from the bank.
But the Chief Executive Officer of the company, Edwin Provencal, has told Citi Business News the GH¢64 million credit facility, which was sourced to boost the trading position of BOST, was completely settled last month.
“In 2017, when we came to power, we engaged GCB Bank, and the good news was that they waived off all penalties and other charges etc, with the promise that they were going to stick to our payment plan. So, that is what we have been doing since 2017, and the good news is that the last bit was cleared last month January, so we have finished clearing GCB debt.”
“We are extremely excited. What this does is that it cleans our balance sheet. It contributes to our balance sheet so we can leverage it to borrow for our operations. We assure that going forward, any other facility we get, we will use a much-disciplined approach to get it,” the BOST CEO stated.
BOST turnaround agenda
The settlement of the GCB Bank loan comes at a time the oil storage and transportation company has embarked on a drive to bring the company back to profitability.
According to Mr. Provencal, it would take an amount of US$150 million to turn around the operations of the company.
Making a case for the amount, Edwin Nii Obadai Provencal, the Managing Director of BOST, said about US$75 million of the funds would be used to upgrade and rehabilitate the company’s infrastructure and the other half would be deployed as working capital.
According to him, the new funding would make the company economically viable and lead to the payment of dividend to government within the next two to three years.
Mr. Provencal explained that the needed funds could come from an increase in the BOST Margin in the petroleum product Price Build-up, government support; or funding from Investors.
He noted that should the option of BOST margin be implemented, it would result in the immediate increase in the prices of fuel, but would in the medium-to-long term, be of great benefit to consumers as BOST’s effectiveness would reduce the price at the pumps.
Mr. Provencal said the capital injection would enable the company to move from its current state of loss-making and low capitalization to a profit-making and dividend-paying company.
Mr. Provencal said the capital injection would also help the management to desist from under-utilizing the company’s assets and use resources fully to operationalize the dormant barges of the company, which transport oil from Akosombo to Buipe and other resources lying idle.
He said the new strategy is focused on improving the operational efficiency of the company by moving from the use of outdated manual systems to a full automation system.
“If the regulator does not regulate well and allows cross zonalisation, then, our dreams may be delayed,” he said, adding that, the vision to transform BOST would not be materialized if we don’t do effective stakeholder management.”
Mr. Provencal said the vision would not come to fruition if there is poor stakeholder management with transporters, tanker drivers’ unions, the regulator, the government, employees of BOST and many other stakeholders.