In the past two years, income-earning assets of the Bulk Oil Storage and Transportation Company Limited (BOST) have improved from 18 per cent to 91 percent, Mr Edwin Provencal, the Managing Director, has said.
He said that was a result of Management’s drive towards operational excellence, which also led to a revaluation of its assets in the 2020 financial year.
“The revaluation of the assets become necessary as most of the assets still in operation had been written down to near-zero levels whilst still useful in the operations of the company,” he said.
Mr Provencal said this during a media engagement to refute the purported loss of GHC400 million being speculated in a session of the media that, as required by the International Financial Reporting Standards (IFRS), when assets were revalued, the increase in their values is taxed resulting in larger tax obligations.
The revaluation, a deliberate decision to enhance the company’s reporting, led to a deferred tax obligation of GHC292,935,973 compared to the net loss of GHC291,017,758, a difference of GHC1,918,215.
He said the increase in the value of the revalued assets also resulted in increased depreciation charges, which further reduced the bottom line or the profit for the year.
In any financial year, any loss in the market value of shares of GOIL Company Limited was computed and that reduced the income of BOST to arrive at its net profit or loss for the year as it had 20 per cent shares in GOIL, Mr Provencal said.
“In the year 2019 to 2020, our investment in GOIL saw a reduction of GHC15,674,525 in market value.”
“Respectfully, this event is external to BOST operations, and therefore to gauge the performance of BOST, Management and Staff by this loss in investment will not be fair.”
“This is the reason why we should rely on the profit before tax rather than all these uncontrollable factors, which have been factored in to arrive at the net profit or loss for the year.”
Mr Provencal said the recorded net losses for the years 2019 and 2020 per the income statement were GHC101,411,781 and GHC291,017,758.
“BOST has seen a turnaround, any comprehensive and objective analysis of the audited statements for the past five years 2016-2020 profit before tax trend will show a company on track to higher performance through enhanced efficiency,” he said.
“We look forward to capitalising on these modest improvements to make BOST an example of a World-Class State-Owned Enterprise.”
Mr Provencal noted that it remains uncontested that the debt to suppliers and related parties of $623 million has been paid down to $39 million, the debts owed the local banks of about GHC273 million has been fully cleared.
“Our pipelines, which were procured in 2011 and left to the mercy of the weather in the United States under the AT & V contract have arrived safely on our shores and we expect to complete the installation of the additional 12-inch pipeline between the Accra Plains and Akosombo depots.”
“The cash flow position of the company is enhanced and the repair of the company’s infrastructure continues despite the reduction in our BOST Margin,” he said.
“So, we believe that BOST can be run like any world-class organisation. It is possible. And so going forward the next four years, the focus is on operational excellence, holding people accountable and aggressively growing our business.”
Mr Provencal said in the past, the Company used to be saddled with numerous challenges such as loans and debt payments, however, under his leadership, the fortunes had turned around.
BOST’s mandate was to develop a network of storage tanks, pipelines, and other bulk transportation infrastructure throughout the country, he said.