GNPC wastes oil money •Unable to recover $122m

By Isaac Aidoo

Five years after oil production, the misuse of the Ghana’s oil revenues and the lack of transparency and accountability in the award of oil blocks among others are denying Ghanaians the full benefits of the oil resource.

The 2014 Auditor- General’s Report has made damming revelations of financial irregularities at the state oil corporation, the Ghana National Petroleum Corporation (GNPC).

According to the report, the GNPC in 2013 advanced US$50 million to the Ministry of Finance, an amount which was expected to be repaid in three months but has not been paid back.

This revelation was confirmed by the 2014 report of the Public Interest Accountability Committee (PIAC) which said “at the request of the MoF, the GNPC gave an amount of US$50 million to the Ministry of Finance as advance. The said advance was expected to be used to fund components of the Western Corridor Gas Infrastructure Development Project.”

PIAC which is mandated by law to oversee the management of petroleum revenues pointed out that “The quantum of GNPC’s utilised funds would have been more than 50 per cent of its allocated funds in 2014 and the accumulated funds in excess of US$230 million but for the advance payment made to the MoF.”

The Committee is on record to have bemoaned the manner in which revenues accruing to the oil sector were spread too thinly over a wide range of projects, diluting its impact, instead of being utilized on only a select few.

The Auditor- General’s report disclosed further that the GNPC failed to audit its partners in oil operations, a requirement imposed on it by the Petroleum Agreements signed with the partners.

Further checks have revealed that in 2013, GNPC applied US$31 million of its share of oil revenue to repay a loan facility taken from French multinational bank, PNB Paribas, which was incurred at the instance of government in respect of oil lifting since 2009.

It will be recalled that some Members of Parliament raised issues about GNPC’s use of US$41 million to support crude oil purchase by VRA through a bank in Ghana.

The findings have raised disturbing concerns about GNPC’s seriousness of becoming a major operator in the oil sector as envisaged in its strategic plan.

Government’s strategy for the GNPC which is derived from the Petroleum Revenue Management Act (PRMA) is to invest in the Corporation over a period of 15 years to build its capacity to drill oil.

Government is required by the Act to cede up to 55 per cent of Ghana’s net receipts from oil production, to the GNPC which it has been doing religiously.

Industry experts have expressed concerns about the use of allocations made from oil revenues and captured within the national budget. The development comes on the back of recent calls on government to cut budgetary support to the GNPC and other state owned enterprises.

Energy expert, Dr Steve Manteaw and representatives of the Convention Peoples Party (CPP), the Peoples National Convention (PNC) and the New Patriotic Party (NPP) at a recent forum contended that the continuous reliance of non-performing state owned enterprises on government’s subvention was a drain on the economy.

According to Dr Manteaw, “the situation where we put GNPC on the national budget feeding it like a baby which never grows must cease.”

Following the findings of the Auditor-General, Think-Tank, Africa Centre for Energy Policy (ACEP) has accused the GNPC of becoming a slush fund for government and called for a probe into GNPC’s finances to establish the corporation’s financial requirements.

ACEP further called on Parliament to amend to GNPC Law 64 to bring the corporations activities under parliamentary scrutiny, including approvals of loans, budgets, and use of resources.

“GNPC by these irregularities is demonstrating that it has no capacity to spend the oil money allocated it from Ghana’s share of oil revenue,” Executive Director of ACEP, Dr Mohammed Amin Adam said in a statement.

According to him, GNPC should have the capacity to raise financing to drill and discover oil  but if they are not using the money to build their capacity to be able to produce oil and  are now a finance institution granting loans, then what happens to their core mandate?

“The Corporation is giving the money out as loans and to cover any other expenditure that government deems fit,” he alleged.

Economist with the Natural Resource Governance Institute (NRGI), Mark Evans was disappointed over the findings, warning it had dire implications for the country’s oil sector.

“Everybody wants GNPC to drive Ghana’s oil and gas industry and not to allow wastage and corruption to open a black hole for petroleum revenues. Achieving this requires governance reforms: PNDC Law 83 must be revised to clarify GNPC’s mandate, improve transparency and create robust oversight mechanisms,” he stated.

According to him, the Institute had sometime last year raised issues over GNPC’s published accounts, pointing out that the accounts were far from satisfactory in terms of transparency.

“NRGI and Fat-Africa raised a concern that GNPC’s published accounts were below the required standards and their investment strategy offered little clarity about its plans. GNPC’s work remains worryingly opaque and the list of concerns is mounting, “Evans noted’

He said there was a worrying lack of appetite for governance reforms, suggesting that “government and parliament must shape a clear vision for GNPC, clarify its mandate and make it more accountable.”