Gov’t’s heavy indebtedness to GNPC risks collapsing oil company

The Ghana National Petroleum Corporation (GNPC) faces a looming threat to its survival, as government indebtedness to the Corporation mounts, according to a report by the Public Interest and Accountability Committee (PIAC).

The report highlights that as of the end of 2022, the government owed GNPC a staggering $1.14 billion.

This debt encompasses payments made on behalf of the government, state-owned enterprises (SOEs), national and local projects, as well as gas supplied to the Ghana National Gas Company (GNGC).

PIAC raises concerns about GNPC's expenditure, which extends beyond its core mandate, hindering its ability to function as an autonomous commercial entity in the petroleum sector.

Substantial sums, such as $124.66 million, were spent on Gas Enclave roads in the Western region, often at the behest of the government and other entities, diverting resources from GNPC's primary responsibilities.

PIAC warned that GNPC faces a precarious future post-2026 when it will cease to receive funding from the Petroleum Holding Fund as per the Petroleum Revenue Management Act (PRMA).

The Corporation may struggle to survive without this financial support, given its existing challenges.

Political influence poses another significant risk to GNPC, compelling it to engage in quasifiscal expenditures and extend advances to other state-owned entities, encroaching upon central government prerogatives.

To mitigate these issues and ensure GNPC's sustainability, PIAC recommends several measures. Firstly, GNPC should prioritize its mandate and development by refraining from making payments on behalf of the government and retrieving owed funds expeditiously.

Additionally, the Corporation should cease funding external programmes and projects at the request of other agencies.