PIAC expresses concern over growing VRA gas debt
The Public Interest and Accountability Committee (PIAC) wants the government to, as matter of urgency, ensure that all outstanding debts the Volta River Authority (VRA) owed the Ghana National Gas Company (GNGC) are fully settled.
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The growing debt, which stood at US$227.78 million as at the end of December 2015, was in respect of gas supplied to the VRA for power generation in the year under review.
In an interview with the Graphic Business, Chairman of the PIAC, Professor Paul Kingsley Buah Bassuah, said the chain of debts surrounding gas supply was worrying and, therefore, the government must ensure that all debts are fully settled.
“The Ministries of Petroleum and Power must ensure that all outstanding receivables in respect of lean gas sold to the VRA, which stood at US$227.78 million as at the end of December 2015, is paid as matter of urgency so as to guard against the GNGC falling into the never-ending cycle of indebtedness prevalent in Ghana’s energy sector,” he said.
He explained that this would ensure that the GNGC was in the position to pay the Ghana National Petroleum Corporation (GNPC) for raw gas exported to the Atuabo Gas Processing Plant.
The debt
The VRA’s indebtedness to the GNGC grew by approximately 120 per cent over a six-month period from US$103.61 million as at June 2015 to US$227.78 million in December 2015.
Total interest payable by VRA in respect of its debt accrued from the lean gas supplied by GNGC at the end of the review period was US$1.12million.
The GNGC is in turn indebted to the Ghana Group (GNPC) up to the tune of US$79.06 million in respect of raw gas delivered to the Atuabo Gas processing Plant from the Jubilee Field since the commencement of gas production.
Blame game
The VRA’s indebtedness is attributed to the subsequent debts owed it by the Electricity Company of Ghana (ECG). In another breadth, the government and its agencies are also indebted to the ECG, a situation which made it difficult for the latter to also clear its debts with the VRA.
Prof. Buah Bassuah explained that it was high time the blame game stops in the power sector to halt the mounting debts.
On the implications of these mounting debts, he said “If they don’t pay, it means we are losing funds. We raised the same recommendation in our semi-annual report and now it has accumulated interest. I think the earlier the government steps in to stop the chain, the better it would be because it looks as if the chain is becoming too long. This is going to affect GNGC operations as well as GNPC.”
Oil production in 2015
A total of 37,411,661 barrels of crude oil and 52,546 million metric cubic feet of gas (MMscf) was produced from the Jubilee Field in 2015. The Ghana Group lifted 5,730,090 barrels of crude oil from the Jubilee Field in 2015.
A total of 41,113 barrels of crude oil was produced from the Saltpond Field in the first, second and fourth quarters of 2015. The 2015 production represents a 48 per cent decline from 79,602 barrels of oil produced in 2014.
Although oil production from the Saltpond Field has been declining over the past four years, the 2015 decline in output was occasioned by a five-month shut-down.
Petroleum receipts
Revenue from the sale of petroleum in 2015 was US$396.17million, approximately 46 per cent lower than the projected revenue and 60 per cent lower than revenue accrued in 2014.
“The huge variance between the actuals and projected revenue is attributable to a significantly lower than expected crude oil price, which experienced a year-to-year decline of nearly 49.4 per cent,” the report said.
No royalties were received from the Saltpond Field even though US$37,129 ought to have been paid in the first half of 2015 as indicated in the PIACs 2015 semi-annual report. — GB