This record is a partial extract of the original cable. The full text of the original cable is not available.


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MILLENNIUM CHALLENGE CORP

C O N F I D E N T I A L  ACCRA 000656 
 
SIPDIS 
 
 
E.O. 12958: DECL: 03/15/2015 
TAGS: KMCA ETRD ENRG
SUBJECT: FIRE AT PORT KILLS 15, DAMAGES OIL REFINERY SUPPLY 
LINES AND VALCO 
 
REF: A. ACCRA 552 
     ¶B. ACCRA 399 
 
Classified By: Econ Chief Chris Landberg for Reasons 1.5 (b and d) 
 
¶1. (U) Summary: On March 25 a large fire at the port of Tema 
broke out on a ship at the PCS Tema Shipyard (PCS) and 
damaged the parastatel Tema Oil Refinery's (TOR) fuel 
offloading pipeline, the Volta River Aluminum Company's 
(VALCO) alumina conveyor and a small shipping and cold 
storage company.  15 workers on the ship were killed.  The 
fire, fed by fuel and oil leaking from TOR's pipeline, burned 
for 7 hours before being extinguished.  TOR is currently 
unable to offload crude or finished petroleum products, but 
has made assurances that the fire has not affected operations 
at the refinery and that reserves will cover the time 
required for repairs. 
 
¶2. (U) Summary Continued: President Kufuor visited the site 
March 29 and announced the formation of an inter-ministry 
task force to investigate the cause of the fire.  Media 
speculation about the cause of the fire initially focused on 
TOR, but now revolvs around allegations made by PCS union 
leaders tat the Shipyard's Malaysian manager ignored safety 
procedures to cut costs.  Early damage estimates xceed USD 7 
million.  End Summary. 
 
CAUSE AND ORIGIN 
---------------- 
¶3. (SBU) EconOff visited the site of the fire March 30 with 
TOR Safety Manager, Festus Seshie.  The fire allegedly 
started when sparks from welding on a ship at the PCS dry 
dock --adjacent to the TOR pipeline located on the VALCO 
pier-- ignited either oil or diesel near the ship.  Seshie 
confirmed that a "minor" leak had been detected during 
routine maintenance of the pipes in the week prior to the 
fire.  The fire engulfed the ship under repair killing all 15 
men on board.  It then spread down the pipeline for 
approximately 1 kilometer, destroying the VALCO alumina 
conveyor suspended above the pipes as well as TOR's water 
pump house, which provided seawater for cooling TOR's 
distillation unit.  The ship upon which the blaze allegedly 
started has been removed from the dry dock.  EconOff asked 
how fuel from a "minor" leak could feed a fire for seven 
hours in an area with no other large source of combustibles. 
Seshie offered the rubber on the conveyor as a possible 
source.  A report in the Gye Nyame Concorde newspaper quoted 
Janet Eduasi, Secretary of the Dolphin Shipping and Cold 
Storage Company destroyed in the fire, as saying her 
employees reported the leak to TOR, the harbor authority and 
the harbor fire brigade a week before the fire. 
 
EFFECTS ON TOR 
-------------- 
¶4. (SBU) Seshie said repairs would be completed with material 
on hand, adding that only 10 meters of pipe needed to be 
replaced.  The rest of the pipe had been inspected and deemed 
fit for use despite being exposed to high temperatures for up 
to seven hours.  TOR is using freshwater for cooling until 
the seawater pumps can be replaced.  According to Seshie, the 
repairs, which are underway, should be completed in a week. 
He said TOR had enough crude oil for seven weeks of regular 
demand.  ExxonMobil Managing Director Sam Kareem confirmed 
TOR's reserve estimates in a telcon with EconOff March 29, 
but estimated repairs would take at least three weeks, 
possibly longer if new damage is found. 
 
DAMAGE TO VALCO 
--------------- 
¶5. (SBU) VALCO's conveyor was destroyed along the entire 
pier.  The conveyor was used to unload alumina brought in by 
Kaiser Aluminum before VALCO was shut down, and figures 
prominently in the GoG's announced plans to restart the 
smelter this summer with management and alumina supplied by 
minority owner, ALCOA (ref B).  VALCO's Resident Director, 
Charles Mensa, told EconOff in a telcon March 29 that the 
conveyor would cost USD 3 million to repair.  NOTE: ALCOA 
Director of Corporate Development, Randy Phillips, told 
EconOff in a telcon that ALCOA, through the ALCOA Foundation, 
would offer assistance the families of the victims of the 
fire.  END NOTE. 
 
COMMENT- FUEL FOR POLITICAL FIRES 
--------------------------------- 
¶6. (C) Although tragic in its human cost, the fire is a 
windfall for the GoG vis--vis IMF's repeated calls for 
deregulation of the petroleum sector.  The Ministry of Energy 
recently postponed plans to allow a public tender that almost 
certainly would have required another fuel price increase on 
top of the 50 percent increase in February (ref A).  The fire 
has interrupted TOR's ability to offload any crude or 
 
 
finished product, making the canceled tender a moot point, at 
least temporarily.  Even if the lines are repaired before 
reserves run out the GoG will once again be faced with the 
choice of either increasing retail prices to reflect higher 
world crude prices or subsidizing TOR, which drained 
approximately USD 200 million from government coffers last 
year. 
 
¶7. (C) President Kufuor's formation of an investigative task 
force clearly relieved TOR employees, who used the 
announcement mantra-like to fend off most of EconOff's 
questions about events leading up to the fire.  Initial media 
reports, however, focused on TOR's leaking lines.  During the 
President's visit workers at PCS were allowed to approach 
Kufuor and make public accusations against the shipyard's 
Malaysian Manager, Rahin Bim Jaafa, stating that he refused 
to allow safety crews to oversee the work in order to avoid 
paying increased wages on a national holiday (Good Friday). 
 
¶8. (C) Comment Continued: Bim Jaafa complained of labor 
problems during EconOff's visit to the port in November 2004 
and alleged that the government was provoking labor unrest to 
force a renegotiation of his company's contract.  Regardless, 
it is difficult to see how a thorough investigation can be 
completed with repairs and demolition already underway and 
the relocation of the ship where the fire started.  In a 
further twist, Minister of Harbours and Railways Christopher 
Ameyaw-Akumfi inaugurated the President's investigative task 
force on March 31 by admonishing the members not to rule out 
the possibility of sabotage.  It seems the GoG is setting the 
stage for diverting blame from itself and the parastatel TOR 
to foreign or other parties.  End Comment. 
YATES 
 
 
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