GNPC justifies 2018 workplan and budget

The Ghana National Petroleum Corporation (GNPC), has fully justified its programme of activities for this fiscal year and explained in detail the rationale for the various activities and projects it intends to undertake.

According to the corporation which is fast gaining roots as a formidable oil company in the sub region, each of the projects and activities have far reaching benefits for the country in the short, medium to long term.

Speaking in an interview with the Graphic Business on Monday, the Chief Executive Officer of the GNPC, Dr K. K. Sarpong, said the projects and activities have been carefully evaluated with all the cost benefit analysis thoroughly done to ensure value for money for the country.

This was after sections of the public demanded to know the rationale behind some of the projects and activities of the corporation after Parliament approved its workplan for the year.

Marine security

On the issue of marine security, Dr Sarpong justified why the GNPC intends to acquire patrol vessels to monitor and ensure the safety of the country’s oil fields.

This comes at a time when the activities of pirates along the coast of the sub-region is reported to be heightening.

According to Dr Sarpong, presently, the offshore companies were doing so at cost to the JV Partners, whiles engaging personnel of the Ghana Navy and paying them insignificant amounts for their services.

“We want to acquire these vessels ourselves and in the end, we will save a lot of cost and also equip the Ghana navy offshore”, he said.

Dr Sarpong said, the GNPC plans to enter into a tripartite arrangement with the Ghana Navy and a third-party vessel builder/investor to acquire a total of six patrol vessels at an estimated cost of US$45million to provide security services for its offshore activities. This will be run on a Build Operate and Transfer (BOT) basis after which the property will be transferred to the Ghana Navy.

The GNPC Boss said the only way of ensuring that some of the operations on the oil fields fell in the hands of Ghanaians was to undertake prudent and pragmatic measures to localise some of the operations offshore and “this issue about the vessel is one typical way of ensuring that.

Again, he said the GNPC will use part of the funds obtained from the operations of the marine patrol vessels to revamp and reactivate the operation of the dry dock area at the Takoradi port.

We pay close to a 100 million dollars in services a year and therefore, if this can be done through the BOT system it will inure to the benefit of the GNPC. This will be a rental arrangements and later the vessels will be for the country and can be rented out to the foreign companies.

The foreign companies have a way of taking out money they earned from the country and that must be stopped once “we find a way of providing the services locally”.

$48 million will be spent and 2 million will be reserved to refurbish the dry dock in the naval base and do repairs there and that will improve the capacity of the Ghana Navy. It’s not in a vacuum. The Ministry of Defense is doing the procurement to get the right equipment but we will use our balance sheet to support it so that it can inure to the benefit of the country. The selection of the JV partner would be done through a very competitive process to select the best. We want to internalise the revenue from marine patrols in Ghana.

Investment in Prestea Gold mines

“We agree that our core business is not gold mining but the country has invested heavily in that mine in the past. The mine was rehabilitated and it started making profit but poor management and inefficient handling of affairs got it run down”, he said.

Dr Sarpong explained that the GNPC decided to go to Parliament to seek funds to pay existing obligation, use some as working capital before placing it on divestiture.

According to him, “It’s not the time to lay off workers when things can be revived to turn around its fortunes”.

Dr Sarpong said a strong management team has been put in place to turn around the fortunes of the mine and after a couple of years when things are better, it will be placed on divestiture because as it is now “anybody who buys it now will do so with a pittance and we do not want that to happen when we see prospects and good money once we get things done right”.

Office buildings

Reacting to speculations that the President had failed to honour his promise of moving the operational headquarters of the GNPC to the Western Region, Dr Sarpong, described the negative impressions created as most unfortunate and a calculated attempt to distort the real facts of the matter.

He pointed out that it is the intention of the GNPC, as per the pledge of the President, to have the operational headquarters of the GNPC in the Western Region.

“Those who undertake the full operations of the GNPC are those who will be positioned there. They will deal with the various companies operating offshore so that things will be made easier for them and they will also have the opportunity to concentrate on those duties”, he said adding that; “It is the operational activities of the corporation that would generate the employment opportunities as envisaged by the President”.

He said the GNPC Foundation which is now being housed in a rented place will also be located within the building adding that “the foundation is working to directly empower the people in the region, particularly farmers and fishermen, who are being given direct support to improve their economic capacity. This should provide them the ability sell to the supermarkets and foreigners who will hitherto to, buy from outside”.

With regards to the building in Accra, Dr Sarpong said that it will be the administrative headquarters of the corporation to direct the operations of the corporation across the country, including the Western Region and the Voltaian Basin. This would give the corporation a real international identity as in the case of other oil producing countries.

“We have gotten to a level where our brand must resonate to befit our status and our administrative headquarters will serve that purpose”, he said.

Dr Sarpong was optimistic that within the next two to three years the project will be completed.

He debunked the assertion that the projects are being executed merely for employment creation purposes saying “we will create new positions but those companies that deal with us will now have a strong base to operate here and they will create the job avenues; They will give us money because some will also want to rent some of the office floors to operate from there”.

Loans

Regarding the loans to be contracted by the GNPC, Dr Sarpong made it categorically clear that, the GNPC will borrow using the strength of its balance sheet.

“Our loans contracted will under no circumstance, add to the public debt because we will borrow using our balance sheet,” he clarified.

He reiterated that not all the funding gap would be financed through loans. He indicated that some institutions and organisations including the Ministry of Finance owes the corporation and once these monies are relayed, they would go to reduce the funding gap.

Some of the expenditures are also self-paying and the monies would be immediately recouped.

Gas Administration

On the issue of the Gas Administration, Dr Sarpong said “The independent administration and monitoring of produced and sold oil and gas volumes is an important and recognised component of the oil and gas sector. All offshore and onshore operations including those in Ghana have third party systems for allocating produced volumes to stakeholders, tracking oil and gas volumes through transportation systems and managing sales contracts.”

“This requirement to find an immediate source of demand is often (as in Ghana) placed with a single buyer (Gas aggregator) and delivered through share...