The Civil Society Platform on Oil and Gas, has called for a high level forensic probe into the operations of the Ghana National Gas Company (GNGC), because its establishment and operations have not followed due process.
Among other things, the Platform has cited the registration of GNGC as a limited liability company while funding it 100 percent with money from the state, as incongruous.
At a heavily attended press conference addressed yesterday, October 18, 2012 in Accra, by Dr. Steve Manteaw, the Platform’s Chair, the group stated; “The registration of GNGC as a limited liability company, while funding it 100% with public money, is in our view an anomaly that makes it difficult for the exercise for the kind of public oversight that are the norm with public companies such as the Volta River Authority, the Ghana National Petroleum Company, Electricity Company of Ghana etc.”
In a seven point concern tabled in a statement issued at the Press meet, the Platform also expressed worry that the gas infrastructure project currently underway has not been approved by Parliament, while an Environmental and Social Impact Assessment required for projects of this nature is yet to be complied with.
Other concerns conveyed were that because the company was established by the presidency without recourse to the sector ministry, it undermines the authority of the ministry, adding that they view it as improper for Dr. Kwesi Botchwey and Dr. Sipa Yankey, who worked on the feasibility and road map to developing Ghana’s gas resource, to have benefited from their report to the President, by their appointment to the company that emerged as part of the implementation of their recommendations.
Also of utmost concern to the Civil Society Platform is the fact that although the 2012 budget and economic policy statement of the Republic of Ghana estimates that the country loses about $36 million annually through transfer pricing, for which reason Ghana with support from the EU has developed new rules, SINOPEC, a Chinese company working on Ghana’s gas infrastructure has been able to inflate its purchases from a related company.
“We are concerned about the relatively high cost and low liquid recovery of the gas plant being procured for the project,” the Platform capped its list of concerns. According to them, the Sinopec International Petroleum Services Corporation (SIPSC) is delivering a processing plant that will cost $40 million more than another plant which is considered superior by virtue of having five additional features, including specifications that are favourable to the Volta River Authority (VRA).
“Various simulations indicate, for instance, that the ‘superior’ plant would yield additional revenues in excess of $100 million every year, translating to about $360,000 per day,” the Platform disclosed, saying “In addition, the 45-kilometre shallow water pipelines to be installed by SIPSC will cost about $1.6 million more per kilometre than the deep water pipeline installed by the Ghana National Petroleum Corporation (GNPC) despite the shallow water pipelines not meeting the technical requirement of having internal coating.”
In view of the forgone, the Platform has placed a five-point demand on government, starting with the forensic investigation into the GNGC’s operations. “We make this demand because of the huge costs being recorded relative to the gas project and their ramifications for gas pricing when the project is completed,” the group advanced.
Ghana’s projected price of delivered gas to Takoradi is put at $5.9 per MBtu according to a study by the African Centre for Energy Policy (ACEP), while it is estimated that per SINOPEC’s operations the price of delivered gas will be raised higher, thereby “making Ghana’s Jubilee gas not only uncompetitive, but also uneconomical to industrial consumers who will be unjustifiably denied cheaper source of energy than what the West Africa Gas Pipeline Company offers – currently at $6 per MBtu.”
The Platform also demands that the President gathers the political courage to deal with those that may be found culpable of any impropriety at Ghana Gas and that the company be restricted as a subsidiary of the Ghana National Petroleum Corporation under the Ministry of Energy’s oversight.
It also insists that Parliament takes immediate steps to call for the GNGC-SINOPEC deal to be laid before it for debate and possible ratification in order to streamline the GNGC’s activities, while the Environmental Protection Agency (EPA), must take steps to make Ghana Gas comply with its regulations on Environmental and Social Impact Assessment.
By Edmund Smith-Asante