By Kizito CUDJOE
A decision by the Ghana National Petroleum Corporation (GNPC) to shift major loan obligations from its books to its subsidiary, Explorco, is raising red flags with the country’s oil revenue watchdog.
The loans, tied to state guarantees for Karpowership and Litasco, were initially borne by GNPC on behalf of government.
Now, GNPC’s offloading of those liabilities to Explorco has drawn sharp criticism from the Public Interest and Accountability Committee (PIAC), which says the move risks undermining the subsidiary’s very purpose.
According to PIAC’s 2024 Annual Report, the Government of Ghana (GoG) – represented by the Ministry of Finance – was unable to honour payments to Karpower, which resulted in the drawing down of a US$117million guarantee. This amount, the report notes, has been crystallised as a loan to GNPC Explorco.
Additionally, PIAC revealed that a loan agreement of US$117million has been restructured between Litasco and GNPC Explorco, which includes guarantees of US$155million. The escrow agreement, PIAC said, is being negotiated by both parties.
“With regard to restructuring the Karpower and Litasco guarantees and restructuring these facilities to the books of Explorco, GNPC reported that discussions are ongoing between the Corporation, Government of Ghana and Explorco on terms of the loan with a goal of eliminating Explorco’s exposure to debt.”
These developments, the Committee said, “will potentially saddle Explorco with debt and defeat its purpose as a solely commercial wing of GNPC capable of sustaining the Corporation when it no longer benefits from disbursements from the Petroleum Holding Fund (PHF)”.
PIAC’s warning highlights growing concern over how state-backed guarantees and liabilities are being handled, particularly when commercial arms like Explorco are expected to operate independently and generate their revenue in a post-oil-revenue future.
GNPC has argued in the past that the “revenues from a subsidiary of a company established under Act 992 are neither due to its shareholder, i.e. the parent company, nor shareholders of the parent company. The parent company is due dividends from the subsidiary when appropriate”.
It also said in favour of one of its subsidiaries, the Jubilee Oil Holdings Limited (JOHL): “As a commercial entity, JOHL’s operations are not covered by ordinances of the Petroleum Revenue Management Act (PRMA). The PHF is due taxes and royalties from JOHL, just like any other commercial entity with an interest in any of Ghana’s blocks. JOHL’s revenues are not revenues due to the state through GNPC just because GNPC is fully owned by the state. Per Act 992, GNPC is due dividends from JOHL.”
Given this latest development, PIAC has urged that parliament take steps to insulate GNPC and GNPC Explorco from loans and guarantees on behalf of government, its agencies as well as national and local infrastructure projects.
In a related development, PIAC in its latest report also detailed that GNPC Explorco, made two liftings (in the Jubilee field) during the year under review, amounting to US$145,681,117 as compared to two parcels in 2023 yielding US$143,315,459.
It said proceeds from the second lifting, which occurred in December 2024, will be received in January 2025.
However, PIAC said the revenue from these liftings was not paid into the PHF for 2024. JOHL received US$272,652,209 from its liftings in 2022. This brings the total lifting proceeds not paid into the PHF since 2022 to an amount of US$488,790,045.
