Ghana National Petroleum Corporation (GNPC) could soon become unproductive as it cannot finance its operations due to the government’s failure to settle the unsustainable debts owed to the parastatal organisation.
The government owes GNPC $1.14 billion since the end of 2022.
The sum stands for the GNPC’s settlements in the interest of the government and State-Owned Enterprises (SOEs), gas supplied to the Ghana National Gas Company (GNGC), and local and national projects.
This alarming revelation was captured in the Public Interest and Accountability Committee (PIAC) report titled, “The Role of GNPC in the upstream petroleum industry: challenges and Prospects.”
PIAC blows a whistle about the corporation’s reckless expenditures, which are restricting its ability to operate as an independent commercial establishment in the petroleum industry.
For instance, by the end of 2022, total expenditure on the various Gas Enclave roads in the Western region stood at US$124.66 million.
According to the Public Interest and Accountability Committee, the disbursements often made on behalf of the government and other agencies, are subverting GNPC’s capacity to attain its primary responsibilities and contribute to its development.
PIAC is forewarning that GNPC risks coming to nothing after 2026 when it will no longer receive funding from the Petroleum Holding Fund.
“The PRMA mentions that the NOC is to be funded for 15 years following the start of commercial production of crude oil, following which it will no longer be supported with funds from the PHF. This means that after 2026, GNPC will no longer receive funding from the PHF. Given the challenges that confront the Corporation, it may not be able to survive without government support if the enactment is implemented”, PIAC said.
PIAC also fears that the Corporation is subject to political capture, which often compels it to undertake quasi-fiscal expenditures and advances to other parastatals which ordinarily should be the preserve of the central government.
To address these challenges and ensure the sustainability of GNPC, PIAC recommends several measures.
Firstly, PIAC wants GNPC to commit more funds to its mandate and development by desisting from making payments in favour of the government and its agencies whilst calling for urgent action to retrieve funds owed to the Corporation.
PIAC also urged GNPC to abstain from funding programmes and projects of public and private enterprises, a practice tantamount to bringing operations of the petroleum powerhouse to a halt.
PIAC’s recommendations underscore the need for GNPC to operate as a financially sustainable and independent entity within the petroleum industry, with a focus on fulfilling its core mandate and promoting its long-term viability.
About GNPC:
GNPC is Ghana’s National Oil Company (NOC) established in 1983 to replace the Petroleum Department, an agency under the Ministry of Fuel and Power.
The department was responsible for the importation of crude oil and petroleum products for the Ghanaian economy.
The mandate for oil exploration was held to be the Technical Directorate of the Ministry of Fuel and Power and the Geological Survey Department.
The Ghana National Petroleum Corporation (GNPC) was created to promote the Government of Ghana’s objective of supplying adequate and reliable petroleum for the country and the discovery of crude oil in the country’s territories.
It was also to help in reducing Ghana’s dependence on crude oil imports through the development of the country’s petroleum resources.