Ghana - Petroleum Refining and Distribution Project

 Petroleum refining and distribution project Report No: ; Type: Report/Evaluation Memorandum ; Country: Ghana; Region: Africa; Sector: Refining Storage & Distribution; Major Sector: Oil & Gas; ProjectID: P000871 Ghana - Petroleum Refining and Distribution Project (Credit 1819-GH) The Implementation Completion Report (ICR) for the Ghana Petroleum Refining and Distribution Project (Credit 1819-GH, in the amount of US$15 million, approved in FY87) was prepared by the Africa Regional Office, with Part II contributed by the Borrower and the implementing agencies. Other financiers, the European Investment Bank and the Kreditanstalt fur Wiederaufbau (KfW) did not provide any comments. The major objectives of the project were to: (a) increase the reliability and reduce the cost of the supply of petroleum products by improving the operating efficiency of the Tema Oil Refinery Ltd. and the distribution system; (b) strengthen the management and operating practices of the refinery and the distribution network; and (c) reduce pollution from the refinery. Project components included: i) completion of the rehabilitation of the refinery (initiated under Credit 1446-GH, approved in FY1984); ii) rehabilitation of petroleum storage depots and retail outlets of the Ghana Oil Company Ltd. (GOIL); iii) facilities for petroleum product transport via Volta Lake; and, iv) training of GOIL's personnel. The project included convenants on petroleum product pricing. The project achieved many of its physical objectives such as rehabilitation of the refinery, rehabilitation of storage depots and retail outlets, an improved transportation system for petroleum products and increased access to kerosene and diesel oil in remote areas. It also partially achieved its environmental objective of reducing the threat of oil leaks to marine life. The expected benefits from the energy saving investments did not materialize and GOIL is facing serious financial problems, bringing into question its long term viability. In addition, the Government decided to make a major investment in expanding the refinery's output from 28,000 barrels per day to 35,000 barrels per day. The reestimated ERR for the various components range from 16 to 55 percent as compared with 18 to 28 percent indicated in the SAR. The ICR rates outcome as satisfactory, sustainability as uncertain and institutional development as substantial. OED agrees with these ratings, except for outcome which is rated as marginally satisfactory. Bank performance is also rated as satisfactory. Major lessons drawn by the ICR are that i) in technical projects with important development and financial policy components, it is essential to ensure the staffing of missions with appropriate related skills; and ii) since rationalization of the Government's investment program in the energy sector was an important issue at the time of project preparation and negotiations, prior consultation with the Bank should have become one of the covenants The ICR quality is rated as unsatisfactory. It does not contain a mission's aide m‚moire, nor an operational plan to address the continuing financial and environmental problems of the project Moreover, the ICR does not provide any information on the historical performance of the refinery, nor data on costs and prices to assess the reliability of the expost ERR calculations. No audit is planned.