The Public Interest and Accountability Committee’s report on the management of petroleum revenues for 2023 has about 13 Chapters yet only a minute aspect of the report is discussed.
This post seeks to offer a little breakdown of the role of the Ghana National Petroleum Commission in the usage of Ghana’s oil funds allocated in 2023.
In 1896, Ghana first discovered crude oil onshore, with exploratory activities carried out until 1966 when it ceased. Fast forward, the Ghana National Petroleum Corporation (GNPC) was established in 1984 by the GNPC Act, 1983 (PNDCL 64) with a mandate to seek maximum value to the State – from exploration, production, marketing and investments in upstream petroleum and related activities.
According to the 2023 PIAC Report, GNPC received an amount of US$269.76 million as its share of crude oil proceeds. The amount represents a 13.42 percent decline over the 2022 receipts, largely on account of poor revenue performance from TEN Oil Field in respect of both Levels A and B receipts (equity financing cost and cash ceded to the National Oil Company) due to the drop in the production levels from the Field.
Join our WhatsApp Channel for more news
The Corporation is said to have recorded a total expenditure of US$220.19 million in 2023 leaving a cash balance of US$52.71 million with US$147.11 million being provisions for payments to be made as of 31st December 2023 giving rise to a deficit of US$94.4 million.
Again, staff cost under GNPC’s expenditure was US$17.39 million in 2023 marking a 15.71 percent reduction over the 2022 spending of US$20.63 million. GNPC staff costs have been reduced marginally since 2021.
This was largely due to the payment of salaries in Cedis whereas receipts and allocations are in dollars and with the depreciation of the Cedi over the years, forex gains are recorded in respect of staff costs.
Moving away from its challenges, the 2023 PIAC Report noted that, although GNPC was advised to stop a wasteful expenditure of a total of $126.89 million since 2014 on the GNPC Gas Enclave Roads, it still went ahead to spend a whopping $2.23 million on Gas Enclave Roads in 2023.
According to PIAC, in 2023, GNPC allocated $1.13 million to the Maritime Boundary Special Project, increasing the corporation’s total spending on maritime boundary activities to $14 million. PIAC’s 2017 annual report revealed that GNPC allocated $3.8 million for secretariat expenses related to the Ghana-La Cote d’Ivoire Maritime Boundary Dispute.
PIAC however requested a refund of $3.8 million, arguing that the ITLOS case was a dispute between two sovereign states, Ghana and Cote d’Ivoire, and not a matter for GNPC, a National Oil Company (NOC), to be involved in. PIAC argued that it was inappropriate to utilize GNPC’s resources to cover the litigation costs.
Contrary to PIAC’s demands, the 2023 annual report showed that GNPC had not refunded the $3.8 million spent in 2017, with GNPC defending its actions by stating that, as the state’s oil manager, the expenditure did not harm the corporation.
The 2023 annual report uncovered an additional $1.13 million spent by GNPC on the Maritime Boundary Special Project (MBSP), bringing the total expenditure on maritime boundary-related activities to $14 million.
According to PIAC, GNPC continued to allocate funds to the Maritime Boundary Dispute and related activities, even though the Ghana Boundary Commission is mandated to handle these matters and has its budget.
While PIAC acknowledged that GNPC’s payments were part of its parliamentary-approved work programme, it disagreed with the corporation’s reasoning for the spending.
The report further recorded that, the country’s crude oil production dropped from a peak of 71.44 million barrels in 2019 to 48.25 million barrels in 2023.
PIAC advised GNPC to strengthen its governance by focusing on its core commercial mandate. Also, having been part of all petroleum agreements in Ghana, it is the expectation that GNPC has acquired the necessary experience and technological capacity that will enable it to become a stand-alone international operator.
To survive and thrive in the energy transition, the GNPC needs to rethink its strategies and business models and explore new opportunities and markets.
