The Public Interest Accountability Committee (PIAC), has iterated calls to the parliament of Ghana to place restrictions on the proportion of Ghana National Petroleum Corporation’s (GNPCs) budget on corporate social investment (CSI) and guarantees to State institutions.
This has become warranted as a result of the NOC’s profligate spending on non-core activities. In 2021, GNPC could not realise its budgeted revenue from loans and guarantees amounting to US$126.68 million out of an accumulated total of US$318.09 million owed the Corporation by Government and its agencies since 2011.
Additionally, GNPC spent $15.53 million, representing 22.02 per cent of its Level B receipts ($70.54 million) on Sustainability and Stakeholder Relations and GNPC Foundation in 2021.
In the PIAC’s 2021 report, it recommended “…Parliament [should] consider placing some restrictions on the proportion of GNPC’s budget on CSI and guarantees to state institutions, particularly in light of their inability to respond to some of their cash calls”. The PIAC also remarked that “GNPC’s CSI expenditure must not replace the use of the ABFA to fund government projects and programmes.”
GNPC’s Expenditure on CSI
Based on its findings, the GNPC’s expenditure on CSI was high, increasing from GHS41.49 million in 2018 to GHS49.98 million in 2019, with the Corporation’s guarantees for other state-owned entreprises (SOEs), amounting to $645,511,405.40 in 2019, representing about double that of 2018, and also outweighs the Corporation’s total equity financing expenditure of $164.79 million in 2019.
For 10 years of commercial production of oil (2011 – 2020), GNPC’s receipts in total equity financing costs (Level A receipts) amounted to $1.14 billion, representing 55 per cent of the total GNPC allocations. Level B receipts for operational costs and other expenditures amounted to $921 million, representing 45 percent of total allocations. This brings total receipts of the Corporation to US$2,059.8 million for the period.
Between 2016 and 2020, the NOC lost GHS40.5 million in investments made to non-core businesses (Mole Motel, Prestea Sankofa Gold, and Airtel). Since then, the situation has not really changed that much, as some of these investments continue to sit on the books of the NOC.
“PIAC calls on GNPC to double down efforts at recovering loans to Government and its agencies to ensure that the Corporation’s work programme does not suffer from non-implementation. For now, GNPC should discontinue granting loans and guarantees until significant recoveries are made with respect to outstanding loans and guarantees owed the Corporation.”PIAC report
Meanwhile, experts and citizens keenly following the NOC’s work have also waded into the debate. Madam Elizabeth Allua Vaah, Risk Manager at TD Bank in Canada, and a Leader of the Ghana Environmental Advocacy Group, is cited to have said:
“My first thought after reading this [section 2, subsection 2b of the PNDC Law 64] says to get the most benefit in terms of what we get as a state from the development of the resources, i.e. Upstream revenue as opposed to usage of the revenue, it doesn’t mandate GNPC to build roads and turf fields, for instance, but rather to ensure that we get enough from the development of the resource for those whose job it is to build roads and turf fields to have enough funds to do so. And in this regard, GNPC seems to be failing miserably looking at the agreements we’ve signed for our oil blocks.”Elizabeth Vaah
According to her, “…organizations are created for a core purpose. Once they become the be all and end all of everything, they lose focus, and fail in their core mandate…”
While this could also be attributed to political interferences, that is the more reason why this issue should be considered holistically and addressed with much urgency to make the NOC deliver on its mandate effectively.