What Ghana Can Do To Save Its National Oil Company From Political Control

Freddie Blay, NPP Chairman and Board Chairman of GNPC

Accra, Ghana, September 13, 2020//-Ghana National Petroleum Corporation (GNPC), the 100 percent state-owned national oil company (NOC) has been suffering from the malaise of political control, since its birth 1983.

Wastage malaise  

This malaise has also resulted to waste of oil cash, political interference and perceived corruption within the company which is the custodian of the country’s oil resources.

Experts in the industry including civil society organizations (CSOs) had thought the status quo could have changed because of the calibre of people managing the affairs of the country.

The situation is rather becoming worst day in day out. Still, the Chief Executive of the GNPC and its board chairman were appointed by the current President of Ghana, Nana Addo Dankwa Akufo-Addo.

The CEO, Dr K.K Sarpong and the board chairman, Freddie Blay are both darling boys of the President and his governing New Patriotic Party (NPP). So, the investment decisions of the GNPC are being made by politicians masquerading as business managers.

Dr. KK Sarpong is the CEO of the GNPC

In additional, most of the decisions made by the two men are geared towards benefiting the current administration politically.

For instance, after complaining about revenue shortages for exploration, development, production and disposal of petroleum activities, GNPC has doled out several millions of Ghana cedis into non-core activities through its foundation.

Heated exchanges at PAC

Just recently, there were some heated exchanges at the country’s Public Accounts Committee (PAC) sittings, over GNPC’s allocations to Okyehene, EOCO, Rebecca Foundation, among others.

When the Ningo Prampram MP, Sam George asked why the board of GNPC had to directly approve over GH¢5 million to be paid to the above mentioned individuals and institutions without routing it through the GNPC foundation.

Board Secretary, Matilda Ohene struggled to answer the questions raised resulting in a follow up from Chairman for the Committee, Dr James Klutse Avedzi.

However this harmless inquiry was greeted with disdain from deputy ranking member for the committee, Mohammed Hardi Tufeiru. This ugly development brought proceedings of the day to a sudden end.

The GNPC had doled out the over GH¢5.42 million as sponsorship and donations to Okyenhene Amoatia Ofori-Panin, the Paramount Chief of Akyem Abuakwa; First Lady, Mrs Rebecca Akufo-Addo, among others.

The company in 2019 approved the payment of GH¢120, 000.00 to First Lady’s Rebecca Foundation, $1.8 million for the celebration of Okyenhene’s 20th Anniversary, GH¢50, 000 to the Ghana Journalists Association (GJA), $30, 000 to Ghana Boxing Association, and GH¢400,000 towards the preparations of the Damba Festival.

Despite the public anger over these payments, the General Manager-in-charge of Sustainability at GNPC, Dr. Kwame Baah Nuarko, justified the approval of the sponsorship packages, saying they were not new as they are in line with GNPC’s vision.

Is GNPC becoming government?

Just early this month, there saw a news item in the newspapers that the GNPC was going to construct Teleku Bokazo road. And what people keep asking is this: is the GNPC becoming government?

Upon reading this in the news, participants fumed at a two-day workshop for some members of Institute of Financial and Economic Journalists (IFEJ) and Ghana Journalists Association (GJA) organized by the Secretariat of Ghana Extractive Industries Transparency Initiative (GHEITI).

They said: “We did not give GNPC money to go and construct roads. If they are more interested in constructing roads than looking for oil, then let’s change their name”.

So, that Ghana Highway is assigned the responsibility for looking for oil, and then GNP will be assigned the responsibility of road construction”.

Dr Steve Manteaw, Co-Chair of GHEITI, the Ghana subset of the global EITI, admitted that all companies do corporate social responsibility (CSR) investments.

“But we need to actually draw a distinction between CSR and this kind of transaction. Because if we don’t, in an election year because the leadership and management of GNPC were appointed by government and its president, areas where they want to win votes, they would direct GNPC to go and do ABCD to influence votes in which case, using the resource to their political advantage”.

“So, we must be very careful about how and what investment GNPC does. So, we are supposed to throw more light on that and report them in the EITI report(s)”, Dr Manteaw said.

Again, loan details should be disclosed, including repayment schedule and interest rate(s). This according to him would help improve transparency in the operations of the company.

 Microfinance

GNPC cannot cry for money because it has actually become microfinance. This is because it gives substantial amounts to state entity as loans including some $50 million to the Ministry of Finance.

As stated in the 2017 and 2018 oil and gas sector report by GHEITI, GNPC as at the end of June, 2018 has not received the payment in respect of the $50 million advance to the Ministry of Finance.

On 7 September, 2018, the Ministry wrote to inform the EITI Independent Administrator that, provision had been made in the 2019 Budget for the settlement of the loan to GNPC.

Freddie Blay, NPP Chairman and Board Chairman of GNPC

On 15 December 2018, GNPC indicated that it received another letter from the Ministry directing that the amount be expunged from its books, on the ground that per the Earmarked Funds Capping and Realignment Act, 2017 (Act 947), the Minister for Finance is empowered to cap all earmarked funds at 25 percent of tax revenues.

The Ministry indicated that the Government had not retained GNPC’s flows thus far with the view to offsetting the US$50 million loan.

Initially, when this issue was raised the Ministry said it was a loan. At that time, Ghana was going through EITI validations, so the international panel said if it were a loan, let them see the loan agreement. And there was no loan agreement, Dr Manteaw noted.

$25 million GNPC’s office complex

In August this year, President Akufo-Addo cut the sod for the construction of the GNPC’s $25 million Takoradi Operational Headquarters at the time oil prices on the international market are tumbling.

President Akufo-Addo being assisted to cut sod for the $25m GNPC office complex in Takoradi in the Western Region

Although the magnificent office complex upon completion would provide office space for 400 staff, many Ghanaians are not enthused by the decision to build such an expensive building at this critical time.

Even the GNPC has two head offices in Accra and Tema, serving its staff. So, they see no reason why millions of dollars have to be pumped into another office in the Western regional capital.

But officials of GNPC said it is good to have plush offices in almost all the areas that they are exploring for oil as it would save the company from renting.

Similarly in 2013, the GNPC became the headline sponsor of the national team, Black Stars, after several attempts by the Ghana Football Association (GFA) to secure a juicy sponsorship for the team.

The oil company supported the GFA with $3 million yearly for five year period which brought the total amount to $15 million. The deal was sealed on January, 4, 2013, and truncated in 2017, following pressure from leading party figures of the current government.

Part of the amount as at 2017 was being used to pay the salaries of the players, some officials of the GFA had said.

In September 2017, Ghana’s Majority Leader, Osei Kyei Mensah-Bonsu registered his displeasure with expenditures made by the GNPC.

According to him, the GNPC is wasting millions of cedis through activities it has not been legally mandated to undertake.

“When you consider the fact that about a third of our oil revenue goes [there] and somehow a lot of them get misapplied, we should be worried as a country,” he told participants at a forum to discuss the work of Parliament.

What Can Be Done

Dr Manteaw and other experts who are calling for the dilution of the state participation in state-owned enterprises (SOEs) are hesitant in the case of GNPC.

In his words: “But the particular case of GNPC, we need to be a bite careful how we approach it. Because, the 1992 Constitution of Ghana vested all our natural resources in the President who holds them entrust of the people”.

The President has delegated that to GNPC.  The GNPC which holds about a third of the revenue generated from oil production in the country, has become the custodian of oil resources.

“So, if you go to the stock and go and privatise GNPC, you are allowing foreigners and outsiders to become part owners of the resources entrusted in the care of GNPC. So, we can’t do it directly”.

“What we can do is to create or float a special purpose vehicle or a withholding company into which people can buy shares and not buy directly into GNPC. In that case, we can safeguard our resources that are bestowed on us by the Constitution”, Dr Manteaw suggested.

Experts say until the country finds a way to safeguard its SOEs from political control and interference the country will not make any headway.

By Masahudu Ankiilu Kunateh, African Eye Report

 

 

 

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