GNPC comes under fire; Tasked to invest funds prudently
The Finance Committee of Parliament has advised the Ghana National Petroleum Company (GNPC) to regularly revise its work plan and activities to optimise the use of its idle funds for productive investments.
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The committee noted that the GNPC had recorded positive balance at the end of every year since the inception of oil production and the allocation of funds from the petroleum revenues.
It was ,therefore, of the view that the continuous surplus was not an optimum way of utilising resources and could be an indication of either an over allocation or resources or the GNPC’s lack of capacity to spend.
This was contained in its report on the Public Interest and Accountability Committee’s (PIAC) report on the management of petroleum revenues for 2014.
As at the end of September, 2015, the GNPC had cash of US$192 million of its share of oil revenue not spent. Of that amount, US$187 million was carried forward from the previous year.
Concerns
There have been numerous concerns raised about how the GNPC has been using funds allocated to it from the country’s oil revenues.
Some analysts are of the believe that the allocations were too much and asked for a review to allow the state to chanell part of it into more productive sectors of the economy.
For instance the GNPC had been bashed dolling out about US3milion to sponsor the senior national team, Black Stars, when the team brings no laurels to the country. The management of the team is accused of not rendering accounts to any authority hence the reason many instituions shy away from sponsoring the national team.
The corporation has also been fired for allowing the government to borrow funds for reasons which are not clearly explained.
GNPC’s response
Officials from the GNPC, however, explained to the committee that the Maritime Boundary dispute between Ghana and Cote d’Ivoire which was currently under arbitration at the Special Chamber of the International Tribunal of the Law of the Sea (ITLOS) in Hamburg had affected some of its planned investments, especially on the TEN field.
They explained that the order by the ITLOS to suspend further drilling on the disputed site had stalled planned investments in the fields which contributed to the surplus in the books.
According to them, the GNPC was a partner in the oil field and could only invest based on decision by all partners, which involved negotiations that causes delays in the implementation of planned activities.
It further explained that as a result of the decline in crude oil prices, some of its partners were delaying investments in oil projects, which also meant a suspension of planned investments in these fields by the GNPC as well.
This, it said, was because the GNPC did not have the capacity to undertake the project by itself and assume the entire risk for the project.
Provision of guarantee
The committee also recommended to the Ministry of Petroleum and the GNPC to make the provision of guarantee a mandatory requirement for any firm that intended to enter an exploration agreement in the country.
This was because it found out that a surface rental bill of US$67,438 issued in February, 2013 to Oranto/Stone Energy, one of the companies licensed to undertake exploration work in Ghana, still remained outstanding as at the end of 2014.
The GNPC pointed out to the committee that Oranto/Stone had not only defaulted in the payment of the surface rentals but also obligations in respect of training and work schedule.
It indicated that as soon as the GNPC initiated the required processes to revoke the license issued to Oranto and to terminate the exploration agreement as a result of the default, the firm came to settle its 2014 indebtedness, leaving the 2013 surface rental outstanding.
Oranto’s exploration license has since expired and the Minister of Finance explained that following the default, the ministry had initiated the necessary process to retrieve the said amount by serving notice to the directors of the company, but he said the ministry was ,however, unable to locate the directors.