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6.4.16 - GNPC rejects 'slush fund' label

The Ghana National Petroleum Corporation (GNPC) has refuted allegations that it is a reserve fund that government dips its hands into at will. The Chief Executive Officer, Mr. Alexander Mould in an interview insisted that monies owed the Corporation were given for specific infrastructure projects related to gas delivery. On theAtuabo Gas processing plant for example, we financed the construction of apipeline, and also spent additional funds in constructing access roads to enable the evacuation of LPG to serve Ghanaian consumers. The agreement is that we will be reimbursed,” Alexander Mould told B&FT.

“The amount was therefore not advanced to government as a slush fund. It’s specifically given to construct the roads and pipe lines that were critical forsupplying gas for electricity generation and for supplying LPG to Ghanaian consumers”,  he said in response to concerns in the public sphere that government is borrowing recklessly from the Corporation. It is clear therefore that the US$50million that the Auditor General’s report for the year ended December 31, 2014captures as money owed the corporation by the Finance Ministry as well as another US$34million were advancedfor spending on the aforesaid gas infrastructure projects. The GNPC boss indicated that there were arrangements for GNPC to be reimbursed, and that the Corporation was working with the Ministries of Petroleum and Finance to settle the outstanding amount. “Following the release of the Auditor General’s report, concerns were raised in the public domain that government was unduly borrowing from the Corporation, with the Africa Centre for Energy Policy calling it a “slush fund” for the government.

Mr. Mould took the opportunity to remind the commentators about GNPC’s role in the oil and gas sector in Ghana. As the national oil company and the national Gas Sector Aggregator, GNPC, he said, has the primary responsibility to enable the development of the gas market, and work to eliminate bottlenecks to the supply of gas in the country. He pointed to the obligations of the Corporation to offtake gas from all upstream partners including those of Jubilee, TEN and Sankofa, adding that infrastructure bottlenecks are no excuse for the GNPC’s obligations under the various gas sales agreements it has signed with those partners.

A third amount, US$52,348,305 owed the Corporation by the Tema Oil Refinery (TOR), according to the GNPC Boss, was for outstanding balance on fuel supplied to TOR. He explained that amidst acute shortage of fuel in the country, Government of Ghana called on GNPC to assist with crude imports between November 2009 and May 2011. This intervention by GNPC averted shortages which would have crippled businesses and immobilized the commuting public. GNPC were the counterparty in the crude oil Government-to-Government contract between Ghana and Nigeria. The crude oil imported was refined by TOR under agreement with GNPC, and sold to BDCs. However, TOR still owes GNPC, apparently due to cash flow challenges. Meanwhile, to halt the excessive interest that the outstanding balance was attracting, GNPC had to pay BNP Paribas, the issuer of the letters of credit (L/C) covering the importation.

The GoG as shareholder of TOR is aware of this liability, and have acknowledged the indebtedness, for which GNPC is negotiating a repayment plan. “Is it prudent for GNPC to leave its core functions and instead advance its money provided under the Petroleum Revenue Management Act (PRMA) to government, which is already entitled to more than 70% of oil revenue for the budget and savings?” ACEP questioned in a press release.

The Corporation’s money, the energy policy think-tank argues, should be “ring-fenced” to block government from accessing it at will. However, for GNPC, there is no basis whatsoever for the questions on these transactions,which have been acknowledged by Government and have also been duly reported to the sector Ministry, Parliament, PIAC and the State Enterprises Commission, and that referring to GNPC as Government’s ‘slush funds’ is unjustified.
Mr. Mould added that "Once again, it is very sad that organisations do not interface with GNPC to ascertain the facts behind the numbers, but are quick to run to the press with only glimmers of the facts"

By: Basiru ADAM
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