List TOR, GNPC on GSE - analysts

Economic analysts and experts have rallied behind calls by some civil society groups pushing for government corporations, such as the Tema Oil Refinery (TOR) and the Ghana National Petroleum Corporations (GNPC), to list on the stock exchange.

Civil society groups including the Extractive Industries Transparency Initiative (EITI) are vehemently pushing for the two entities to be listed on the stock exchange in order to address some of the financial and managerial challenges plaguing these corporations.

Their concerns have, however, been met with strong opposition from the Ministry of Petroleum. The Head of Communications at the ministry, Edward Bawa, is reported to have said that listing the two corporations would deprive the state of owning a national oil company -- a situation he said is currently happening in the mining sector and that has proved inimical to the state.

“We have learnt our lessons from the mining companies, that if we do not have a high stake in the oil company we cannot get full benefits from the resource. The only way we can do that is to have a national oil company enabled to compete with the International Oil Companies (IOC).

“If you look at the target of GNPC, in the next seven years it wants to be a stand-alone operator; meaning it will pick a field, develop it, and produce on its own; and so we need to give them the support,” he said.

However, Professor Peter Quartey, an Economist and Lecturer at the University of Ghana, in an interview with the B&FT opines that listing the TOR and GNPC will address the funding and management gaps that have resulted in the corporations’ inefficient operations over the years.

“I will support the idea of the two corporations listing on the stock exchange. Because those two entities are of strategic national interest, government can own some shares and allow the private sector to also own some of the shares in order for them to be run more efficiently. I would opt for a public-private partnership, so that government can offload part to the private sector in order to ensure efficient management,” he said.

He further stated that listing the two government corporations will protect them from a lot of political interference, which has resulted in appointing leaders of such institutions based on their political background rather than on merit.

“Once they are not run as a commercially viable entity you get a lot of non-economic decisions being taken, and this affects their efficiency levels. This is because solely-owned government entities have a lot of political interference. People are not appointed based on merit but rather based on their affiliation to the ruling political party. So what is needed is to have them run as a viable entity; and a viable entity can be public-private partnership,” he added.

He however cautioned that a lot of thinking must go into the decision as to how much stakes should be made available for the private sector, so that their operations do not relegate the national interest to the background.

Prof. Quartey’s position is backed by Wencelav Atule Safrega, Head, Corporate Finance and Research at TTL Capital Limited -- an investment banking and financial advisory firm, who said in an interview with the B&FT that listing on the stock exchange will make government corporations more accountable, which will eventually transcend into efficiency and profitability for such institutions.

“I think it is always good when you open up to the stock market. When you open yourself to the stock market, you open up yourself to public accountability; and this keeps the managers of companies on their toes, making the company more efficient,” he said.

“It also makes sure resources allocated to the companies are used in the best way, which in the long run makes the economy grow,” he said.