…As questionable $40m UT loan saddles GCB
The New Patriotic Party (NPP) government’s strange decision to halt a process that the previous government had started to decommission the Saltpond Oilfield, Ghana’s oldest oilfield, is beginning to smell up with corruption
The previous government had initiated a decommissioning process in 2016 after it had become clear that the oilfields had become economically unviable to operate.
However, for some scant explained reason, the NPP government has halted the decommissioning process and is maintaining the oilfields at a loss to the state even though the Public Interest and Accountability Committee (PIAC) of Parliament has insisted on the need to shut down the field.
The Republic has picked up hints that the stoppage of the decommissioning process was orchestrated by some actors of the Akufo-Addo government who have turned Saltpond Oil into a milking cow and are using it cream up money for themselves.
Among others, sources tell of the usage of the company which operates the oilfield as conduit to siphon state money even as fuel is diverted in the name of the oilfield.
Saltpond Offshore Producing Company (SOPCL), operators of the Saltpond Oilfield, was a devil in the detail of the collapse of the UT Bank last year, through which UT has become an albatross on the neck of the Ghana Commercial Bank.
Some 300million dollar liability that GCB is losing, after it acquired UT Bank, includes a $40million non performing loan that UT had advanced the SOPCL.
With the dramatic collapse story of UT and Capital Bank punctuated with the salvaging role of Ghana’s Finance Minister, who forced the GCB to acquire the two banks, Mr. Ken Ofori-Atta smells up in the detail of the SOCPL connection in UT’s collapse.
It is said that the $40million loan that UT gave to SOCPL was issued without due diligence which would have revealed that Saltpond Oil was not credit-worthy at the time.
The 40million dollar loan is one of the causes of UT Bank’s collapse in 2017, sources say.
Saltpond Oil Field, located about 13kilometers off the coast of Saltpond in the Central Region was discovered in 1970 by a consortium called Signal-Amoco.
Managed by the Saltpond Offshore Producing Company (SOPCL), the oilfield had began experiencing diminishing returns and consequent financial constraints from the late 90s, a thing that led to a brief shut down until it was reopened in 2000.
In spite of some 20billion old cedis being applied by the GNPC to repair the oil rig and other infrastructure, and a move made to widen explorative activities from a fixation on only oil to include gas, SOCPL continued to suffer financial constraints.
Continually dwindling yield from the oilfield worsened its financial position to the extent that by 2013, SOPCL could not break even. In spite of this, management reached out to the UT Bank and acquired a $40million loan to fund increasingly unviable operations.
Sources say that the loan acquisition had been irresponsible because at the time, SOCPL was not in position to even provide adequate collateral for the loan. Management of UT Bank too had either not carried out proper due diligence or had intentionally overlooked credit unworthiness of SOCPL at the time.
Following GCB’s takeover of the assets of the UT Bank, the $40million loan that was advanced to SOCPL between 2012 and 2013 became the liability of GCB. Sources say the assets of SOCPL is not even up to one-tenth of what the company owed UT.
By 2014, PIAC was calling for a decommissioning of the Saltpond Oilfield because its operations had become totally unviable.
“There is the urgent need for a critical appraisal of the viability of the continuous operation of the Saltpond Oil Field against the backdrop of low crude oil price,” PIAC’s 2014 report had said.
SOCPL’s inability to turn around the dwindling fortunes of the company continued into 2015 with the 2015 version of PIAC’s annual report showing that a total of 41,113 barrels of crude oil had been produced from the Saltpond Field in 2015, compared to a 2014 production of 79,602 barrels.
The development was a 48.4 per cent year-on-year decline in production which had led to a total generation of US$274.47 million in the first half of 2015 compared to US$562.48 million received during the same period in the preceding year
Due to the decline, SOCPL had not paid royalties to government a thing that caused the Economic and Organized Crimes Office (EOCO) to launch an investigation.
Previous government’s decision
In 2016, the NDC government decided to decommission the Saltpond Oilfield, and commenced phase one of the process which included identifying consultants and mapping the sites to be cleaned.
GNPC’s Chief Operating Officer in charge of Exploration and Production, Mr. Michael Aryeetey, had explained that the decommissioning formed part of GNPC’s plans for 2016.
“We do have about 17 licences that are active offshore Ghana, with the exception of the Saltpond Field which we are looking at decommissioning,” he had said on the sidelines of the Maritime Week Africa Oil and Shipping Conference in Accra.
The process had however appeared to have been stalled by the 2016 election campaigns, which built up to the NPP winning power in December of that year. Thenceforth, the NPP government had dilly dallied about continuing the decommissioning process.
NPP’s ostrich dance
In December last year, amidst pressure from the media and PIAC, Mr. Francis Ackah, Acting Director of Operations and Resources Management at the Petroleum Commission, had told the media that the Saltpond Oil Field would be decommissioned this year, 2018.
According to him, Ghana’s oldest oilfield was not producing anymore and therefore was only good to be shut down.
In an interview with the Ghana News Agency, Mr. Ackah had also confirmed that funds for the decommissioning process had been allocated.
He said there would be costs and other implications during the decommissioning, but that they had almost been completed to give way for a smooth decommissioning of the oil field which has been producing oil since the 1970s.
However, contrary to the revised decommissioning timeline that the NPP government had given, 2018, the same government has come out to say that it will no longer decommission the oilfield.
In January this year, Mr. Kweku Boateng, Director of Special Services at the Petroleum Commission, announced that some unknown companies had expressed interest in using the latest technology to prospect for oil in the same field that the GNPC says is dry.
“The previous government took a decision that the field should be decommissioned and GNPC was tasked to lead the process of decommissioning. However, recently we have received some proposals from certain companies that claim that there are interesting prospects over there.”
The government has since not revealed what the companies are or what the details of the contracts with them will be. Neither has the government told the Ghanaian people how much has gone into the decommissioning process so far and how the government intends to recoup such taxpayer money.
Behind the maze, The Republic is finding out that monies are still being allocated to the idle company. The allocations are made for the supposed day to day management of the oilfield even though the field is not operational.
Indications are that SOCPL now only exists on paper and some people in government are maintaining it as a cover company through which they reap monies that government keeps allocating to it even though the oilfield is not in operation.
Idle workers of the SOCPL supposedly continue to draw salary that government keeps paying. Last year, PIAC raised an alarm about oil revenue that keeps funneling down the unproductive Saltpoond oilfield.
According to the committee, the continuous use of oil revenues in the payment of emoluments of redundant staff, coupled with maintenance-related costs of the facilities offshore, is a drain which must not be allowed to continue.
The 2017 half-year report of the committee – which has oversight responsibility on the prudent use of oil revenues – estimated that the Ghana National Petroleum Corporation (GNPC) spent about US$74,192.57 on the redundant oilfield in the first half of 2017 alone.
PIAC therefore reiterated its call on government to immediately decommission the Saltpond Oilfield.
However, in spite of the call by PIAC, the Saltpond Oilfield remains unresolved as the government keeps pushing money into it.
But Mr. Kweku Boateng, Director of Special Services at the Petroleum Commission, has made it clear that the NPP government has decided to discontinue the decommissioning process started by the NDC in 2016, which the NPP had postponed to this year.
According to him, some companies want to prospect for more oil at the oilfield which started came under exploration in 1970. Nobody knows who these companies are.
The Republic has heard from sources that monies that the government keeps channeling into the idle oilfield ends up in the pockets of politicians who use it as a cover to ensure that cash keeps flowing from government.
The same oilfield is said to be used by some regime actors to divert fuel, and they do so by ascribing smuggled fuel from the national distribution circuit to the Saltpond Oilfield.
Meanwhile, the $40million loan that SOCPL took from the UT Bank, between 2012 and 2013, which contributed to the collapse of the bank in 2017 has left issues sticking out like a sore thumb.
Among others, it begs to be answered why SOCPL went for that loan which was way more than the value of its assets. The bad loan which contributed to the UT Bank’s collapse has led to the situation in which GCB, is now constrained to pay out some $300million in debts owed by UT, because Finance Minister, Ken Ofori-Atta forced GCB to acquire UT.
Since the acquisition, the government has refused to disclose the exact value of the assets that GCB inherited from UT along with the huge liabilities.
It is said that the International Financial Corporation (IFC) had interests in the UT Bank that must be settled, but UT’s liabilities include the $40million bad debt that it incurred from loaning out the amount to the SOCPL.
The exact value of the SOCPL’s assets is not known but sources say it is less than one-tenth of what GCB must pay over the acquisition of UT. The loan given had been moiré valuable than all the assets of the UT Bank, a thing that infringes on company law.
Source: therepublicnewsonline.com/Stan Adotey