GNPC future need to be discussed-CSPOG

March 2, 2017
Source: Kizito CUDJOE/thebftonline.com/Ghana
GNPC future need to be discussed-CSPOG

The Civil Society Platform on Oil and Gas (CSPOG), led by Dr. Steve Manteaw, has proposed a broader stakeholder discussion to decide on the future of Ghana National Petroleum Corporation (GNPC), to re-position it in pursuit of its long-term goal.

The CSPOG reckons that the GNPC remains crucial to Ghana’s quest to optimise benefits from the exploitation of its hydrocarbon resources.

“This makes the future of GNPC as a frontline company representing the interest of Ghanaians in the petroleum industry.”

But however, according to the CSPOG,excessive political interference and control of the entity has been identified as one of the factors impeding the growth and efficiency of the national oil company.

It cites, for example the processes leading to the acquisition of the two floating power plants supplied by Karpower to augment national electricity generation capacity by the former government.

A development it describes as ‘an arm-twisting of the corporation to provide guarantees,’ and reference to the business case in support of the deal as “only an afterthought.”

Another example, CSPOG observed, is found in the lending of some US$50 million to the Ministry of Finance, an amount which was expected to be repaid in three months but has not been paid till date.

The development is not backed with appropriate documentation in spite of concerns raised by the Public Interest and Accountability Committee (PIAC) and the Ghana Extractive Industries Transparency Initiative (GHEITI), it said.

In view of these happenings, and other considerations, the Civil Society Platform on Oil and Gas maintains that a national stakeholder consultation on the future of the Corporation, should be held.

The purpose should be ‘to build a national consensus on the long-term goal of the corporation, agree on a more efficient financing model, and on the required restructuring to re-position the corporation in pursuit of its long-term goal.’

“The restructuring, which will no doubt involve some changes in GNPC’s statute of establishment, should consider mechanisms for insulating the entity from needless and sometimes harmful political control.”

It also said it should ensure that the CEO position does not become coterminous with a particular political party regime as is the case now. It therefore said a policy option will be to advertise the position and appoint on the basis of technical competence, business acumen, and proven integrity.

“Appointment should be on the basis of a performance-based contract with concrete stipulated deliverables and measurable performance targets tied to negotiated remuneration.”

In an open letter to the President, Nana Addo Dankwa Akufo-Addo, signed by the Chairman of CSPOG, Dr.  Manteaw, it stated that they are prepared to engage government in detail on these issues.

The open letter, titled “Re: 10 Years into oil discovery, substantial governance gaps still remain,” notes that this year will mark the tenth year since the Jubilee oil field was discovered, and offers an opportunity to take stock of the governance of the sector and lessons for improvement

It is noted that the ruling New Patriotic Party’s 2017 manifesto made a fundamental recognition of the:

  1. Transformative potential of oil and gas;
  2. The threat of “oil curse”;
  3. The need for a more efficient allocation of exploration rights;
  4. The need to add value to our oil exports;
  5. The need for backward and forward linkages that help to integrate oil and gas into the rest of the national economy.

“While these provide clear indications of what we need to do to return greater dividend from the sector to the good people of Ghana, we want to take this opportunity to bring to your attention, some of the key governance challenges that in our view thwart our efforts as a country, to fully harness the socio-economic potential of the oil and gas industry in Ghana.”

These findings, were derived from an analysis of the oil and gas sector undertaken by CSPOG with the support of the Ghana Oil and Gas for Inclusive Growth (GOGIG), a DFID programmed support to Ghana.

The analysis found that almost a decade after the Jubilee discovery the country still does not have the full complement of the governance instruments required to efficiently manage the resource.

“Outstanding instruments include: Regulations to the E&P Act 2016 (Act 919); Completion of work on digital cadastral system by the Petroleum Commission, Finalisation of metering regulations and placement before Parliament to go through the process of passage, and Completion of work on the Strategic Environmental Impact Assessment for the Voltaian basin.

Other substantial governance gaps identified by the CSPOG analysis of the oil and gas sector were:

  • Lack of integration of the sector into the rest of the economy;
  • Weak regulation;
  • Poor spending of oil revenues.