The management of the Bulk Oil Storage and Transportation Company Limited (BOST) has saved $20 million on claims it would have paid to eight Bulk Distribution Companies (BDCs).
The Managing Director of BOST, Mr Edwin Alfred Provencal, who disclosed this to the Daily Graphic in an exclusive interview, said the companies had put in a claim with BOST for it to pay them the amount in respect of their products which allegedly went missing from the tanks of the national strategic oil storage company between 2009 and 2014.
He said the claims, which were initially made and agreed for settlement between BOST and the BDCs in 2014, were, however, not effected until 2018 when the BDCs made an appeal to the Energy Ministry to crack the whip on BOST to effect the terms of the settlement agreement.
Providing the processes leading to the savings, Mr Provencal said in 2016, the oil storage company contracted an audit firm, Ernst and Young, to look into the claims on lost products.
The firm validated a volume of 22.7 million litres, which was valued at about $37.6 million, made up of the cost of products and interest accrued over the period.
The amount was to be paid to the concerned BDCs as of 2018 when the BDCs sought the ministry’s intervention for the settlement of the differences.
To bring finality to the issue, the MD said, the management of BOST set up an in-house committee to re-examine the veracity of the claims.
After close to 15 months of “crunch engagements” with the eight BDCs, the in-house committee validated 8.2 million litres out of the 22.7 million litres claim of lost products, 14.5 million litres less than what the audit firm had validated, Mr Provencal stated.
“The value of the validated volumes stood at $12.7 million; a whopping reduction of $24.9 million of the initial amount claimed by the BDCs against the company,” the BOST MD said.
The committee issued its final report in November last year, pursuant to which, Mr Provencal said the company had met all the concerned BDCs who had agreed on the figures for settlement.
“In the settlement process, BOST and the BDCs have agreed to do cash refund, product refund and set-off of service charges.
“It is expected that the final settlement terms with the BDCs shall be concluded to the letter to ensure the company buries this long-standing issue for good,” Mr Provencal indicated.
The Managing Director of BOST commended the in-house team for the great job done, saying, “this is the new BOST spirit and we look forward to keeping this fire alive till we establish a world-class fuel and logistics business at BOST”.
“If we all tune our minds to do things right, BOST shall rise to be the best run state-owned enterprise in the country and be recognised as one of the most outstanding corporate turnaround stories of our time”, he said.
The General Manager, External Relations of BOST, Mr Malik Adjei, indicated that fortunately, all products in BOST tanks had been insured and any loss of even a litre of product was the responsibility of a depot management company, TSL.
He said since 2014 that TSL took over the management of BOST depots, not even a litre of BOST or BDC products had gone missing and the arrangement was envisaged to continue until BOST completed the automation of its depots.