Executive Director of the Institute of Fiscal Studies, Professor Newman Kwadwo Kusi, has cautioned the Ghana National Petroleum Corporation (GNPC) against using a chunk of its revenue from the oil and gas sector on Corporate Social Responsibility (CSR) and its downstream businesses.
According to him, it is not the mandate of the GNPC to focus on activities devoid of its core responsibility of oil discovery and exploration.
Prof. Newman Kusi declared that after the study was done on GNPC, he was appalled that after 36 years of its establishment, the state-owned company has made no significant investment with about US$1.2 billion oil revenue allocated the Corporation.
“The GNPC was established in 1983. This year it will be 36 years. It was established to explore, to produce, to develop and produce oil. In the last 6, 7 years US$1.24 billion dollars has been pumped into GNPC to finance their exploration. Has GNPC on its own said they have been able to discover oil anywhere else in this country?” he questioned.
The GNPC has allocated close to one-third of the total petroleum revenues of Ghana which places it at the core of the country’s aspirations towards effective management of its hydrocarbon resources.
However, over the past three years, GNPC has persistently incurred a total of 9.3% loss from trading in refined petroleum products.
Though, aside from running loses on investments like the Tema Oil Refienry (TOR), Mole Hotel, etc, GNPC’s CSR budget spiked from US$4.4 million in 2017 making 1.4% of petroleum revenue to US28.95 million in 2018 representing 8.5% of petroleum revenue.
This means the 2018 CSR budget exceeded the personnel emoluments budget of US$25.03 million and the general expenses budget locked at US$17.10 million of the Corporation.
In 2018, GNPC engaged in a wide-ranging CSR activities under three main focal areas namely: Education and Training; Economic Empowerment; and Environment & Social Amenities.
While it is a common practice for companies, both private and government-owned, to engage in, the IFS was of the view that the Corporation’s CSR expenditures should be controlled to avoid diverting too many resources from the nation’s coffers which can hinder performance and efficiency.
Alarmed by the vast increment, the think-tank’s Executive Director stated that revenues were not meant for CSRs especially giving scholarships and opening university halls but should be left for the office of the President.
“It (revenue) was not given to GNPC to give scholarships. We have a scholarship Secretariat that is based in the office of the President which sees to that.”
He called for a new law to put a limit on the Corporation’s CSR budget while suggesting that Parliament should exercise its oversight in the quasi-fiscal activities of GNPC.
“It is not the responsibility of GNPC to go and rehabilitate a university hall. That is not part of its recommendation. It is not its core mandate of GNPC to go and finance a hotel. There is a need for a new law that will keep GNPC focused on what it is supposed to do.”
Correction: The title of this article has been edited by changing the word "warns" to "advises" and "use" to "exhaust" following IFS's complaint about the use of the words which they believe are not a reflection of what the Executive Director said in the embedded video.
