Ghanaian indigenous oil marketing company GOIL PLC is facing a financial squeeze. Despite a significant decline in profits, the company announced it would maintain its dividend payout to shareholders for 2023.
Profit Decline and Rising Costs
GOIL’s profits dropped by a staggering 56% in 2023, falling from GH¢123.9 million in 2022 to GH¢54.7 million. This decline coincides with a substantial increase in both finance and operational costs. Finance costs surged by 196%, while operational costs rose by 25%.
The company attributed these financial woes to several factors. According to GOIL Board Chairman Reginald Daniel Laryea, inflationary pressures, foreign exchange challenges, supply chain bottlenecks, and rising utility costs all played a role.
Adding to GOIL’s struggles were industry-wide product quality issues. Laryea acknowledged these problems, particularly in the last quarter of 2023, when rumors swirled about contamination of the company’s super fuel.
“The past year was particularly challenging for our company, fuel-quality wise,” Laryea admitted. He apologized to customers impacted by the issue, explaining that the cause remained unidentified by domestic testing facilities. Fortunately, he assured the public that the situation was brought under control by the year’s end.
Looking Ahead: Growth Strategies and Security Improvements
Despite the current challenges, GOIL outlined plans for future growth. The company intends to commission a bitumen plant and initiate a cylinder recirculation program, pending regulatory approval. Additionally, recognizing the potential impact of electric vehicles on the industry, GOIL is exploring opportunities in this emerging market.
On the security front, GOIL reported a 40% decrease in armed robbery incidents at its fuel stations, thanks to investments in security technology. However, the company acknowledged an increase in cyber and electronic payment system fraud, which it’s actively working to mitigate.
In a separate development, GOIL, through its subsidiary GOIL Upstream Limited, is seeking partners to develop its oil prospects following ExxonMobil’s exit from the Deepwater Cape Three Points block agreement.
GOIL’s decision to maintain its dividend payout despite a difficult year highlights the company’s commitment to shareholder returns. However, navigating rising costs, fuel quality concerns, and a changing energy landscape will be crucial for GOIL’s long-term success.
Source: Graphic Online
