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Recover loans from debtors – PIAC to GNPC

Professor Kwame Adom Frimpong ICAG President 640x375 Chairman of PIAC, Prof. Kwame Adom-Frimpong

Tue, 19 Apr 2022 Source: thebftonline.com

With the inability of the Ghana National Petroleum Corporation (GNPC) to meet its budgeted revenue from loans and guarantees to government and its agencies, the Public Interest and Accountability Company (PIAC) has urged the corporation to put on hold any plans to give out any further loans until significant recoveries are made from its debtors.

The GNPC has an outstanding loan and guarantees amounting to US$126.68million out of an accumulated total of US$318.09million owed it by government and its agencies since 2011, according to PIAC.

Also, the corporation is estimated to have spent US$640,292.89 on the Maritime Boundary Special Project (MBSP) in 2021.

In its 2021 Annual Report, on petroleum revenue management, PIAC indicated that: “Cumulatively, GNPC has spent a total of US$11.85million on maritime boundary-related activities even though the Ghana Boundary Commission is responsible for such activities”.

It is on the back of this development that PIAC has called on GNPC to double up efforts at recovering loans 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 stated in its latest report.

Furthermore, the report also revealed that the Petroleum Commission (PC) has since 2021, terminated the petroleum agreements of some four international oil companies operating on the Deepwater Tano Cape Three Points block for non-performance.

This includes Swiss African Oil Company Limited – SWAOCO, UB Resources, Brittania U, and Sahara Energy Fields Ghana Limited.

However, despite the termination, these four companies account for about 73 percent of an outstanding Surface Rental of US$2.57million.

PIAC revealed that Surface Rental Arrears increased by 22.22 percent from US$2.11million in 2020 to US$2.57million in the 2021 year under review.

While the committee commended the Petroleum Commission for terminating the agreement of four contractors for non-performance, it urged the commission to ensure strict compliance with minimum work obligations by international oil companies.

In the year under review, the average achieved crude oil price of US$69.18 per barrel (bbl) realised by the Ghana Group in all fields was higher than government’s benchmark price of US$54.75/bbl.

However, annual crude oil production declined by 17.7 percent from 66,926,806 bbls in 2020 to 55,050,391 bbls in 2021, despite the rebound of economic activities in 2021, after the easing of COVID-19 restrictions.

Total petroleum revenues increased by 17.5 percent from US$666,390,751.22 in 2020 to US$783,325,849.87 in 2021 due to higher crude oil prices. This is in spite of the decline in crude oil production in 2021, PIAC’s report stated.

Also, it emerged that after a 3-year break, allocations to the Ghana Infrastructure Investment Fund resumed in 2021, with an amount of US$49.39million, following the passage of the Ghana Infrastructure Investment Fund (Amendment) Act, 2021 (Act 1063).

Among other recommendation, PIAC called for the strict compliance with the 2019 judgement of the Supreme Court in the case of Kpodo vs. The Attorney-General, which stipulates that 5 percent of the ABFA shall be allocated and disbursed to the District Assemblies Common Fund (DACF).

This follows the payment an amount of GH¢32.38million to the DACF, for the first time since Ghana started receiving petroleum revenue in 2011, owing to the 2019 decision of the Supreme Court decision.

However, the disbursement made was 1.74 percent of the ABFA, instead of the 5 percent specified in the Supreme Court judgement

Regardless of this, PIAC asked the Ministry of Finance to provide a breakdown of the disbursements to the DACF and report same to PIAC.

Meanwhile, it stated that: “The Ministry of Finance in collaboration with relevant institutions should develop appropriate guidelines on the utilisation and reporting of ABFA disbursed to the DACF”.

Source: thebftonline.com