The Public Interest and Accountability Committee (PIAC) has called for an immediate meeting between the government, the Ghana National Petroleum Company (GNPC) and the Ghana National Gas Company (GNGC) to agree on a clear roadmap for the clearing of VRA indebtedness to the Ghana National Gas Company.
According to PIAC, this has become necessary, because one potential source of funds that could have been used to defray the VRA’s indebtedness to GNGC was the Power Generation and Infrastructure Support Sub-Account (PGISSA), established under the Energy Sector Levy Act, 2015 (Act 899) has been earmarked for the repayment of the debt owed VRA to 11 domestic banks as part of the strategy introduced by the government to deal with legacy debt problem facing the state owned energy sector utilities.
This was part of recommendations captured in the Public Interest and Accountability Committee’s Annual Report on management of Petroleum Revenues for the year 2016 launched in Accra by the chairman of the Committee, Mr. Joesph Winful.
Aside from the recommendations, the PIAC 2016 Report also made some key findings with respect to crude oil production and noted that during the year under review the country witnessed a decline in its oil production with annual production dropping from 37.41 mmbbls ( 102,498 bbls) in 2015 to 32.30 mmbbls (73,995 bopd) and attributed the decline in petroleum production in 2016 to the 34 days shutdown of the Jubilee Field for maintenance from March 31 to May 3, 2016.
The PIAC Report gave Ghana’s crude oil liftings and marketing figures as 4.86 mmbbls for the Jubilee Field in 2016, representing 18.06% which is consistent with the Ghana’s shareholding in the Field.
Ghana 2016 received an amount of US$ 247.18 which is 295 lower that the budgeted amount (US$ 348.42 million) and translated to 44% year on year reduction in annual petroleum revenues, when compared to the 2015 receipts of US$396.17 million.
PIAC expressed concern about how some components of petroleum revenues that fell due during the period under review were either not collected or paid by responsible entities.
“The largest and most blatant of them is GNGC’s failure or inability to pay for gas supplied by GNPC since late 2014, which has led to an accumulated outstanding debt of US$ 135 million dollars. The Committee has been informed that GNGC has not been able to honor GNPC’s invoices due to VRA’s inability to pay their outstanding debt, which is now assessed to be over US$454 million and although the Committee and the GNGC have flagged the dire consequence of the continuous indebtedness to VRA to GNGC in it 2015 Annual and 2016 Semi-Annual Reports, nothing appears to have been done to resolve the issue,” it revealed.
Concerning the utilization of the Annual Budget Funding Amount (ABFA), the PIAC noted with satisfaction how funds under the ABFA were judiciously allocated. “The disbursement of the 2016 ABFA is even more remarkable, considering the fact that it was an election year. Compared to the 2012 financial year which was also an election year, the ABFA was used to fund projects and programmes in 12 different sectors. PIAC is satisfied that its perennial call to the Minister of Finance to concentrate the utilization of ABFA on smaller number of projects selected from few sectors of the economy has been heeded. It’s the Committee’s hope that this practice would continue so as to ensure efficient allocation of our petroleum revenues,” it emphasized.
The 2016 Report, which is the sixth annual report prepared by PIAC, covers the period January to December 2016 and encompasses a broad range of issues associated with the management of petroleum revenues, such as information on production, liftings, total revenues accrued, allocation and utilization of the these revenues by government and the management of the funds set aside in the Ghana Petroleum Funds (Ghana Stabilization Fund and the Ghana Heritage Fund).
It also contains an examination of other issues and findings pertinent to the performance of various institutions charged with responsibilities in the Petroleum Revenue Management Act, 2011 (Act 815) as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893).