The Ministry of Finance is set to write off about $120 million of the Tema Oil Refinery’s (TOR) legacy debt as part of efforts to further ease the financial burden on the state-owned refinery.

Managing Director of TOR, Edmond Kombat, disclosed this during an interview with JoyNews’ James Avedzi, explaining that the proposed write-off would further reduce the refinery’s outstanding legacy obligations, which currently stand at about $400 million.

Mr Kombat said TOR had already gone through an initial debt restructuring exercise that significantly reduced its historical liabilities.

“So we do have legacy debt on our books. When we did the first phase of the restructuring, we brought it down to about 400 and something million dollars,” he said on Tuesday, September 22.

According to him, the Ministry of Finance has now indicated that it intends to write off part of the amount owed to the government.

“Currently, the Minister of Finance is saying they are going to write off some of the debts that are owed to them,” Mr Kombat stated.

“I think they are including this year’s budget. It’s about 120 million dollars. So if that is taken out, it will also further bring the debt down.”

TOR’s five major debt obligations

Mr Kombat explained that TOR’s outstanding legacy debt is made up of five major obligations owed to different creditors.

Among the creditors are private companies Sahara and BP, as well as state institutions including the Ghana National Petroleum Corporation (GNPC) and the Volta River Authority (VRA).

He said negotiations with the private creditors could be more complicated, but management is exploring the possibility of securing discounts on the amounts owed.

For TOR, the proposed debt relief could provide some financial breathing space, but management will still have to demonstrate that the refinery can sustain profitable operations and meet its financial obligations going forward.