Benjamin Nsiah, Executive Director of CEMSE
The Bulk Oil Storage and Transportation Company Limited (BOST) and the Social Security and National Insurance Trust (SSNIT) have been urged to sever ties with the Ghana Oil Company Limited (GOIL) due to its plummeting finances.
According to Benjamin Nsiah, Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE) These state-owned BOST and SSNIT were made to invest in GOIL with the expectation of dividends to support their operations and expansion.
He stated that despite the Social Security and National Insurance Trust (SSNIT) and the Bulk Oil (Energy) Storage and Transportation’s investments of 25% and 20% respectively in GOIL, along with government ownership of about 35%, the company is not performing well in the market.
In the estimation of CEMSE, recent developments have raised concerns about the viability of these investments.
He contended that in its 2023 revenue declaration, BOST excluded GOIL dividends due to their insignificance to its operations. Similarly, SSNIT has faced criticism for its inability to pay TIER 2 benefits due to meager dividends from GOIL.
For CEMSE, the arrangement has become obsolete as Goil Company fails to justify the investment from BOST and SSNIT.
Supporting their proposal for divestment, CEMSE highlighted key factors contributing to the urgency of severing ties with GOIL:
1. Plummeting Share Price: GOIL’s shares have nosedived from Ghc3.12 in 2018 to Ghc1.50 as of March 2024, signaling a staggering 52% loss over six years, while rivals such as Total Energies Marketing Ghana PLC have witnessed share price surges.
2. Operational Inefficiencies: GOIL’s gross margin significantly lags behind competitors like TEMGL, underscoring cost management and sales pricing inefficiencies.
3. Profitability Downturn: GOIL’s profitability witnessed a steep 69% decline in 2023, contrasting with competitors experiencing profit upswings.
4. Financial Metrics: GOIL’s return on assets (ROA), return on equity (ROE), and debt-to-equity ratios paint a picture of underutilized assets and high debt levels, posing risks to the company’s sustainability.
5. Compliance Concerns: GOIL’s failure to furnish audited financial statements to the Ghana Stock Exchange by the April 22, 2024 deadline raises compliance apprehensions, potentially impacting future share prices.
In light of the aforementioned challenges, they emphasized the necessity for BOST and SSNIT to reassess their investments in GOIL to protect their financial interests and secure sustainable returns. By divesting from GOIL and exploring alternative investment avenues, they can bolster Ghana’s social security framework and bolster BOST’s operational effectiveness.
Benjamin Nsiah, Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE), underscores the importance of making prudent investment choices that benefit both investors and the nation’s economy.
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