BusinessOil & Gas/Mining

SIGA report: BOST revenues drop significantly since 2016, lost GHS88.39 million in 2019

The BOST was recently found to have indulged in a number of infractions pertaining to procurement processes to the tune of GHS39 million, according to the 2020 Auditor General’s report

The Bulk Oil Storage and Transportation Company Limited (BOST), continues to run at a loss since 2016, with current financial performance indicating a net loss of GHC88.39 million in 2019, according to a report by the State Interest and Governance Authority (SIGA).

According to the 2019 State Ownership report, although the losses incurred over the period (2016-2019) have been on the high side averagely, revenues have declined at significant margins, standing at GHC524.12 million as of 2019. When compared with revenues in 2016 (GHS2.92 billion), this reflects a shortfall of GHC2.40 billion. BOST’s net loss margin as of 2019 stood at 16.86%.

Compared with 2018, however, revenues increased by 60.18% from GHC327.20 million to GHS524.12 million in 2019. The revenue increase was attributable to 2,282% and 105.35% increases in petrol and diesel sales respectively.

Furthermore, the revenue from petrol and diesel declined by 85.36% between 2017 (GHC1.8 billion) and 2018 (GHC263.64 million) before a 94.69% increase in 2019 (GHC513.29 million).

While the increase from 2018 figures, provided room for a sigh, the increase was far below the SOE’s potential as reflected in the 2016 fiscal year. 

Expenses and profitability of BOST in 2019

The SIGA report indicated that administrative expenses declined by 26.20% between 2018 (GHC241.52 million) and FY2019 (GHC178.24 million) due to non-provision of doubtful debt in 2018 administrative expenses as part of 2019’s.

“The fall in administrative expenses was attributed to BOST not making any provisions for doubtful debt, which accounted 35.78 per cent of administrative expenses in FY2018’s administrative expenses in FY2019,” the report stated.

Moreover, the report highlights that the company’s liquidity position was very challenging during the period as its current and quick ratios for 2019 were 0.90 and 0.84 respectively.

Nonetheless, on account of the company’s profitability, it achieved an Earnings before Interest and Taxes (EBIT) margin of 3.79% in 2019, up from a negative EBIT margin of 52.21% in the preceding year.

In the 2020 Auditor General’s Report, BOST was found to have indulged in a number of infractions pertaining to procurement processes to the tune of GHS39 million. These scenarios among others create rooms for these losses to be incurred and thus unavoidable.

BOST’s mandate is to develop a network of petroleum storage tanks and pipeline infrastructure throughout the country as well as keep strategic stocks of petroleum products.

This mandate is a very important undertaking in the country’s petroleum value chain. Therefore, more efforts should be channelled to make the company get back on its feet. 

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