GNPC tables oil plan to board in weeks

The Ghana National Petroleum Corporation (GNPC) is set to present to its board -- in the next few weeks -- a comprehensive plan of operation that will define its future and chart a suitable and cost-effective way for indigenous firms to participate in the country's upstream oil services sector.

At the core of the plan is the Ghana Stock Exchange, which the GNPC wants to use for making money and as an exit window for ventures it no longer wants to pursue.

The Chief Executive Officer of the GNPC, Alex Mould, explained to the B&FT during an interview in Accra that the plan will determine how the Corporation will form partnerships with local enterprises in the oil services sector, in line with the GNPC’s role as a catalyst for development.

He said as head of the GNPC he will present to the board a model that guides the Corporation’s operations and encourages local participation in the oil sector.

“We are going to our board in the next few weeks to present them with an oil services plan of where GNPC wants to operate and where GNPC believes that other private Ghanaian institutions should operate. And where GNPC decides to operate, GNPC will have a strategy of exactly how it is going to operate and exit in the future.

“And the exit plan is to go to the stock exchange and list the company, whereby GNPC may decide to take a minority or majority share of the company that was 100 percent owned by GNPC,” he said.

The comments of Mr. Mould come at a time there is a growing concern among some indigenous companies that GNPC is using its capacity to stifle growth of local private sector businesses in the upstream petroleum sector.

Mr. Mould disclosed to the B&FT that the plan put together by the Corporation revolves around financial and technical requirement for an area, which will decide the GNPC’s level of participation in the oil sector.

“Should GNPC stifle private Ghanaian companies from participating in the oil sector? My answer is no. GNPC should not stifle them; it should encourage the oil companies and services companies to partner with the local firms to build them up.

“But there are some areas where the private sector in Ghana doesn't have the wherewithal. They don't have the financial strength nor do they have the technical savvy to do it. So it will take a long time for this to be achieved. Now GNPC can come in as a catalyst, because GNPC has both the financial wherewithal and the technical capacity to do the oil services.

“In suggesting to the board where we will want GNPC to operate in, we will first of all look at the criteria: financial intensity and technical requirement.

“Where the financial and technical intensity is low, GNPC should not play there. GNPC should play in areas where the financial and technical intensity are high. That means where the capital required is high and requires a lot of technical knowledge.

“So we are going to focus on the quadrant: where it is technically intensive but low capital, we can partner with the private sector. Where it is high capital and low technical intensity, we can also partner with the private sector to do that.

“But where it is low capital and low technical intensity, we will leave it to the private sector.

“And in each of these, we will have a strategy of how long we are going to stay, the gestation period, and then our exit-plan,” he explained.

GNPC has said it wants to become “an independent operator in seven years and a world-class operator within fifteen years”.

It has recently out-doored a five-year investment strategy, with many analysts believing that listing on the stock exchange may give the national oil company the massive capital it needs to achieve its aims.

But Mr. Mould said the Corporation will for now go to the stock market as part of an exit strategy for ventures it has invested in.

He added: “The exit plan is to make money. We will go to the stock exchange and float shares. We will use the money we used to invest in this area to invest in another area partnering with the private sector.

“So GNPC should be looked at as an entity that has a development role, and one that is a catalyst to the economy. And people should stop saying GNPC is just getting tentacles all over the place and not doing what it’s supposed to do.”