Ghana Gas debt to GNPC edges to US$1 billion – PIAC report
Adnan Adams Mohammed
The Public Interest and Accountability Committee (PIAC) has reported that, the debt of Ghana National Gas Company Limited (GNGC) to Ghana National Petroleum Corporation (GNPC) for gas supplied risen to over US$941 million.
According to the Committee’s 2020 semi-annual report, the indebtedness falls on the part of GNGC’s shareholders refusing to honor their commitments.
“Cumulative raw gas production increased significantly by 65 percent; the highest recorded half-year volume of gas produced since 2010. Total petroleum receipts in the Petroleum Holding Fund (PHF) for the period stood at US$322,571,265.64, indicating a decline of 11.32 percent,” portions of the report said.
“The Ghana National Gas Company (GNGC) received US$1.78 million under the Cash Waterfall Mechanism in order to address their indebtedness to the Ghana National Petroleum Corporation (GNPC) for gas supplied, However, there was no payment to GNPC. Consistently, the non-payment of gas revenue denies the PHF of its due entitlement,” the report added.
PIAC also revealed the GNPC spent only 9 percent of its total receipts on Jubilee Fields equity financing.
This is attributed to the re-phasing of work programmes and disagreements surrounding the Cash Calls submitted by the Operator.
PAIC is the entity established by the Petroleum Revenue Management Act (PRMA) 2011, (ACT 815) to have oversight responsibility over the management and utilization of Ghana’s petroleum revenues.
GNGC is the nation’s premier mid-stream gas business company that owns and operates infrastructure required for the gathering, transporting and marketing of natural gas resources in Ghana.
The Company has the responsibility to build, own and operate natural gas infrastructure required for gathering, processing, transportation and marketing of natural gas and natural gas liquids.
GNGC currently supplies gas to Volta River Authority (VRA) and other commercial institutions for power generation and industrial use.
The report also noted that, Ghana Gas been unable to honour its financial obligations to the Ghana National Petroleum Commission due to the debt.
In 2019, the Ghana National Petroleum Commission delivered gas at an invoiced amount of US$86,733,078.02, but no payment has been made raising the total gas indebtedness to US$668,118,346.04.
“As at 30th June 2020, Ghana Gas Company’s cumulative indebtedness to GNPC amounted to US$393,042,132 as compared to US$263,949,220 during the same period in 2019,” the report noted.
“The debt is exorbitant due to VRA’s inability to meet its debt service obligation,” it explained further.
On the revenue side, the total indebtedness of Ghana Gas to GNPC stood at US$54.33 million compared to US$4.23 million for the same period in 2019.
Ghana Gas’ revenue realised from the sale of LPG and Condensates decreased by 31.13 percent and 48.45 percent respectively.
Also, out of the invoiced amount of US$93,547,640.50, only US$10,185,922.57 was paid Ghana Gas for the sale and transportation of lean gas.
The report noted that the COVID-19 pandemic and its associated effect on crude price on the world market affected revenue from Condensate.
In one of its recommendations, PIAC advised that Ghana Gas and GNPC should agree on a payment plan over the receipts from the Cash Waterfall Mechanism.
“This would ensure that GNPC receives payment for 116 raw gas supplied and makes appropriate lodgments into the PHF. Parliament should play a critical role in this arrangement,” PIAC said.
The Cash Waterfall Mechanism is part of a wider strategy to address the worsening energy sector debt and was approved for use by Cabinet in 2017.