The Bulk Oil Storage and Distribution Company Limited (BOST) grew its profits to GH¢161million in 2021 from a loss of GH¢291million in 2020.
The state-owned firm had made consecutive losses over the past ten years and was saddled with a more than US$624million debt as at January 2017 – which has been defrayed by more than 80 percent to less than US$30million at the end of 2021, BOST stated in its 2021 annual report.
The strategic petroleum products storage and distribution company’s turnaround was propelled by a significant improvement in its core business with an overall increase in petrol and diesel sales revenue of 83 percent, BOST’s Board Chairman Ekow Hackman said.
According to the report, revenue from gasoline (petrol) sales increased by 144 percent from GH¢140million to GH¢341million; with gasoil (diesel) sales also increasing by 46 percent from GH¢227million to GH¢331million.
“This increase was the result of improved financing arrangements for petroleum products, as well as effective customer engagement and retention initiatives to improve the company’s market share,” he said.
One such initiative, he added, led to the securing of new export customers in Mali.
“It’s worth noting that 20 percent of product sales revenue was from this new export market.”
Revenue growth was also realised from areas such as marine transportation business, which went up 412 percent from the previous year’s revenue of GH¢2.9million to GH¢14.9million: mainly due to full deployment of all the company’s four barges after extensive renovation.
Storage and rack revenue also saw a steady growth of 4 percent from GH¢50.4million to GH¢52.6million.
In addition to returning to profit, Mr. Hackman said the company’s core business model – to have a number of operational fuel depots placed in strategic parts of the country, linked by a network of pipelines and barges to enable secure and cost-effective delivery of fuel products around the country – has also been restored.
This is expected to sustain long-term growth and profit for the state-owned company.
Energy minister commends management
The Minister of Energy, Dr. Mathew Opoku Prempeh, said the change in fortunes of BOST demonstrates that with the right leadership and management state-owned enterprises can deliver value while contributing to strengthening government fiscal space.
“The transformation is indeed massive, as evidenced in improved operational efficiency. This is the path to go if we should attain the path of State-Owned Enterprises contributing to the fiscal policy of government for its national growth and development agenda. Imagine if 100 SOEs each made GH¢150million net income,” Dr. Opoku Prempeh said.
He said of the US$611million paid from the US$624million debt in 2017, US$423million came from the company’s internally generated funds.
He also commended the company for effective utilisation of BOST margin, a levy on petroleum products to undertake major repairs works; including the decommissioning of 12 out of fifteen 15 decommissioned tanks, revamping four river barges for fuel transport on the Volta Lake, and upgrade of Akosombo jetty.
The rest are upgrade and replacement of loading arms, pumps and valves across all the depots at Buipe-Bolgatanga-Petroleum-Product-Pipeline; Tema-Akosombo-Petroleum Product-Pipeline; and Bolgatanga Petroleum Export Depot among others.
“Comparing figures, I also saw BOST reducing its administrative expenses from as high as GH¢538million in 2016 with a staff strength of 349 to GH¢212million in the year 2021 with a staff strength of 487.
“Genuine administrative costs grow upward and not downward due to factors like inflation among others. I would like to commend management for the prudence that resulted in these massive reductions in the cost of operations.
“The company is spending less while achieving more for the government and people of Ghana; from the face of the record, this is an impressive performance that the company’s board and management need to be commended for.”
The energy minister assured BOST of government’s support against attempts to derail the progress being made to transform the company.
“I am aware of recent developments in the mass media on BOST, but I am also aware of the political economy around operations of the company. The moment BOST steps up its performance, the avenues for the prosperity of some known private stakeholders become challenged; and in the process of ensuring inefficiency gets restored, unsubstantiated allegations and calculated mudslinging are the obvious weapons.
“Government is aware of the turf-war to get the company derailed, and we are not falling for those to engage the reverse button,” he emphasised.
The company said a corporate strategy from 2020 to 2024 continues to be its guide for the years ahead. The strategy’s key tenets include ensuring stakeholder satisfaction, reducing turnaround time, improving asset utilisation and increasing revenue.
Looking ahead, Mr. Hackman is also confident that the company is on the right footing due to the strong foundations which have been laid.
“Key strategic initiatives that have commenced include the depots upgrade project – whose completion will place BOST on par with other terminals which have state of the art equipment, and will establish the company as the market leader nationwide,” he said.
Another one is the Tema to Kumasi petroleum pipeline, where BOST is seeking a suitable development partner to deliver the project. When completed, it is expected that transportation revenue will become the number-one income stream for the company.
BOST intends to also construct LPG tanks at Tema, Kumasi, Takoradi and Buipe as new activities to boost its revenues while supporting government efforts to create jobs for the youth.