The Public Interest and Accountability Committee (PIAC) has cautioned the Ghana National Petroleum Company (GNPC) to desist from financing infrastructure projects with funds allocated to it from petroleum revenues.
The Committee proposed that any outstanding payment (s) to be made in respect of the Western Corridor Road project must be paid from the allocations to the Roads and other Infrastructure priority areas.
PIAC made this known in its report on the management of petroleum revenue for the first half of 2016.
But, the Ghana National Petroleum Corporation (GNPC) has justified its decision to invest outside its core mandate.
The corporation insists the move is only a strategic one targeted at expanding the opportunities of the corporation.
PIAC in its 2016 report lashed out at the GNPC for refusing to adhere to a directive not to invest its proceed in non-core business of the industry.
In its Semi Annual Report on Management of Petroleum Revenue, PIAC bemoaned the decision of GNPC to invest in areas it has advised the corporation in the past not to invest.
However, the Chief Executive Officer of GNPC Alex Mould has said the decision was needed to ensure the industry is well protected and reformed.
“We can’t sell gas to a weak industry so we have to make sure that we are working with all the institutions that are in the reform of ECG and the power sector to ensure that happens and if that means GNPC gives its balance sheet to assist others, then yes then that means we have to. But that also means we have to have a voice in the running of the sector and the running of the organization.” he said.
He maintained that GNPC cannot detach itself from the value chain since the industry is interconnected with other industries.
“GNPC will be selling gas to all the IPP’s. We will be the largest single entity in the power sector because we will be supplying gas to nearly about 80% to all electricity produce in this country. So it’s important that GNPC be at the table and help in the reforms. To do that GNPC is acting as a catalyst, an enabler to assist the weaker industries in our value chain because ECG is in the value chain of gas, GNPC is disposing off gas.”
Mr. Mould however stated that the right key indicators must be proper supervision to keep companies on their toes.
“The right Key Performance Indicators (KPI) needs to be put in place so that all these companies live to their expectations and don’t let us down.” He said.
Meanwhile, PIAC had also warned that the decision by GNPC to continue financing the Western Corridor Road becomes even more worrisome considering the fact that the allocation to GNPC during the period under review was not sufficient to cover even the Jubilee financing cost.
According to PIAC, total allocation of petroleum revenue to GNPC was $22.77 million while $64.04 million was spent, representing a net deficit of $41.27 million (181.9%).
An amount of $3.12 million was expended on the Western Corridor Roads while $0.32 million was spent as GNPC’s contribution to the decommissioning of the Saltpond Field.
Also, the Committee reported that crude oil production from the Jubilee Field declined by 40 percent from 19.08 million barrels in mid-year 2015 to 11.44 million barrels over the same period in 2016.
It attributed the decline in production to a combination of scheduled shutdown of the FPSO for routine maintenance and a faulty turret bearing which led to the suspension of oil production for up to 50 days.
“The 2016 half-year production volumes are the lowest since 2011. There was a 38 percent decline in the production of raw gas from 27,363 MMscf in the first half of 2015 to 16,904 MMscf during the period under review,” the report said.
The Committee said there was no production at the Saltpond Field following the suspension of operations in December 2015, adding that the Saltpond Field is currently being decommissioned.
It said the Ghana Group lifted 1.95 million barrels of oil, representing 18.48 percent of total liftings from the Jubilee Field between January and June 2016.
“Liftings carried out by the Ghana Group declined by 39 percent when compared to the liftings done during the same period in 2015.
“A total of 9,349 MMscf of wet gas was exported to the Atuabo Gas Plant for processing into lean gas, LPG and condensates.
“Average achieved price for the Jubilee Crude was $40.21 per barrel compared to benchmark price of $53.03, representing a negative variance of 24.21 percent,” the Committee said.