Coming at a very tempestuous time for the country’s hydrocarbon resources, the new CEO of GNPC, Opoku Ahweneeh Danquah, must focus on the company’s core mandate to build its upstream portfolio further in terms of exploration and production, Dr Yusif Sulemana, an energy strategist and oil production specialist at Petroleum Production of Oman, has suggested.
Walking a tight rope, the country is faced with the daunting task of having to abandon its oil and gas resources for cleaner fuels amid calls for reducing its carbon footprint. Despite this call, the country through its National Oil Company’s (NOCs) has resolved since the past year to increase its stake in oil and gas operations upstream in order to become a stand-alone operator.
However, since the first transaction (Aker, AGM DWT/CTP oil blocks) was shrouded in controversies, the NOC has been rather slow towards this drive, though it recently upped its stake (7% interest) in the TEN and Jubilee fields from Occidental Petroleum early this year.
“GNPC is our NOC and its key to our energy security. That’s the backbone of the upstream portfolio to the extent that GNPC as at now, has not been able to independently commission wells that can produce hydrocarbon products in commercial quantities and that is something to worry about.
“Most of these issues have been the fact that, over the years we have not concentrated so much on the core mandate. And so we expect that the new boss should concentrate on the core mandate of GNPC to build the portfolio further in terms of what we can do in exploration and production.”Dr Sulemana
Too much Emphasis on CSR
For most of its reports over the last ten (10) years, PIAC found a worrying trend; GNPC’s expenditure on Corporate Social Responsibility as derailing the company from championing its core mandate.
Section 2 subsection 2b of the PNDC Law 64 (1983), which is one of the key objectives of the GNPC stipulates that, GNPC is to “ensure that Ghana obtains the greatest possible benefits from the development of its petroleum resources.” Meanwhile, the PIAC has contended that the corporation must reduce its profligate spending on corporate social responsibility (CSR) at the expense of its core mandate.
Reports conducted to assess the company’s spending showed that the NOC lost GHS40.5 million in investments made to non-core businesses in just two years (2014-2016). The company’s investment in Mole Motel, Prestea Sankofa Gold, and Airtel – all non-related businesses – were allegedly wasted.
GNPC’s expenditure on Corporate Social Responsibility (CSR) of $28.9 million in 2018 as immoderate and hindered the company’s efficiency in its operations. Within the same period, GNPC was owed by government and other government-related agencies to the tune of GHS794.6 million through quasi-fiscal activities.
“We have to put our energies where our strategic advantage lies. Corporate Social Responsibilities (CSRs) are key and they are very crucial for any NOC to champion. However, we should not do that to the detriment of the core business.
“Our corporate social responsibility drive should not impact us negatively in terms of our core business which means that we have to realign our strategies and focus on our strategic advantage which is the exploration and production. That is key.”Dr Sulemana
A case in point is the trend in the company’s financial performance which has been on the decline. Between 2018 and 2020, the company made an average net loss compared to an average net profit of GHS136.94 million between 2015 and 2017. In 2020 alone, the company made a net loss amount of (GHS1618.82 million).
“We have an emerging area that is renewables. Renewables are coming in full force with high momentum. We will wish that the new boss of GNPC re-strategize to take advantage of the scarce resources.”Dr Sulemana
There is fierce competition between renewables and hydrocarbons in the capital market with the former being much preferred by investors. Thus, investments are shifting away from hydrocarbon resources into renewables.
“This has resulted in a supply deficit culminating into high energy prices in the global market and this has been the driver of the current inflationary pressures we have globally. That is a challenge that the new CEO has to look at to repackage GNPC [so] that investors will still see our portfolio as very profitable.”Dr Sulemana
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