Ghana's Tema oil refinery has been forced to close down again because of a continued problem with a lack of letters of credit (L/Cs).

The problem is a very old one that has threatened to close the refinery several times over recent years.

Feedstock shortage

According to a source at the refinery, it has been closed for the past two weeks because of the problem it has had obtaining L/Cs to pay for feedstock.

"Production has stalled in the past two weeks because there was confusion ... it's about L/Cs to enable us pay for the consignment," the source told Reuters news agency.

The same source indicated that production may begin again soon, suggesting some kind of resolution of the L/C shortage was imminent.

Longstanding problem

The problem the Tema oil refinery has had with L/Cs dates back many years.

In 2002, a lack of L/Cs threatened to force the closure of one of sub-Saharan Africa's handful of oil refineries (DC World News, 04 June 2002).

Government support

In 2009, the government of Ghana sought to solve the problem by appointing a transaction adviser to help raise funds to pay half of the US$600 million owed by the Tema Oil Refinery (TOR) to Ghana Commercial Bank (DC World News, 11 September 2009).

But even after the introduction of this and other initiatives, the refinery has continued to suffer from shutdowns on several occasions when it has failed to obtain L/Cs for feedstock.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.