header('Content-type: text/html; charset=ISO-8859-1'); PIAC to speak on Aker-GNPC deal soon as it meets GNPC, CSOs - News Guide Africa
News Uncategorized

PIAC to speak on Aker-GNPC deal soon as it meets GNPC, CSOs

Adnan Adams Mohammed The Public Interest and Accountability Committee (PIAC) has revealed that it has a scheduled meeting with the Civil Society Organizations and other stakeholders this week to discuss the proposed Aker Energy/AGM and Ghana Petroleum National Corporation (GNPC) deal. PIAC says it has already met GNPC separately but wants to meet some Civil Society Organizations on the deal so it can state their position on the deal. Already, the Alliance of Civil Society Organizations working on Extractives, Anti-Corruption and Good Governance, have raised red flags on the deal as they claim Ghana will be shortchanged, if the government goes ahead to fork out US$1.65 billion for shares in two oil blocks. The Ghana National Petroleum Corporation (GNPC) wants to acquire stakes in two oil blocks—a 37% share in the DeepWater Tano/Cape Three Points (DWT/CTP) operated by Aker Energy and a 70% stake in the South DeepWater Tano( DWT/CTP) field operated by AGM Petroleum. “PIAC is doing independent analysis of the proposed GNPC-Aker/AGM deal”, Lawyer Nasir Alfa Mohammed, Vice Chair of PIAC, disclosed at PIAC’s 10 years Anniversary Public Forum in Accra, last week. “We have met GNPC already, we will meet CSOs on Monday. Then we will speak on the deal.” The Finance Minister in presenting the 2020 budget listed the deal as one of transactional agreements to be laid in Parliament for ratification next year. But the Minority in Parliament has stood against the laying of the deal in Parliament. The deal, when sealed, will mean GNPC will possess significant stakes in the offshore oil blocs, with Ghana’s shares in Aker Energy increasing to 47% while that in AGM blocs goes up to 85%. The Minority clarified that although it was not opposed to the GNPC’s planned acquisition, it has concerns over the inflated cost of the oil blocs. It has therefore called for an independent audit of the deal by the GNPC to ensure value for money. “We in the Minority is not against the policy or decision for GNPC to acquire higher stakes in the said oil blocks per se. However, it must be made clear that we have serious concerns about the proposed hyper-inflated purchase price of the blocks and demand that all the necessary due diligence, independent audits, valuation and appraisals must be conducted by GNPC to ensure value for money for the country before the deal is approved by Parliament.” However, the deal, according to the Ministry of Energy, will result in the formation of a joint operating company with Aker Energy, AGM and GNPC Explorco, the operating subsidiary of the state oil company, as partners. The GNPC is counting on Norway’s Aker and the United State’s AGM to build the muscles of GNPC Explorco, to become a profitable operator–exploring and drilling oil. Over the years, there has been waning interest from western investors in pumping money into the hydrocarbon (petroleum) industry considered as one of the many catalysts for climate change. It’s at a time when there is a demand for a cut down in carbon emissions. With the increasing consciousness about cleaner energy, the GNPC fears that as the funding sources for the sector dry up, Ghana will be left with billions of barrels of crude underground and without the financial and technical capacity to drill. The World Bank and the Bank of England have already raised red flags about the serious risk climate change poses to trillions of dollars of fossil fuel (petroleum) investments. But it is not deterring the GNPC. By this deal, the 38-year-old national oil company wants to position itself for the global energy transition at a time the national budget is heavily dependent on funds from oil and gas. Apparently, the CSOs, who appear to be on a rescue mission, say Parliament remains the last hope for stopping the deal, which they say has no value for money. Although Parliament’s Joint Committee on Energy and Finance has recommended approval of the government’s request for a loan to seal the deal, the 15 CSOs say the lawmakers need to step in, given that the executive has failed the due diligence test, “ostensibly glossing over important threats of the transaction to the country’s fiscal situation.” A breakdown in a memo the Ministry of Energy sent to Parliament shows that while US$1.3 billion is for acquiring Aker’s interest, US$350 million is for the development cost of developing one of the blocks –Pecan phase 1. However, the Committee slashed down the amount requested by the government from US$1.65 billion to US$1.45 billion. They also asked the GNPC to go back and further negotiate the cost down. The CSOs, including the Africa Centre for Energy Policy (ACEP), Ghana Anti Corruption Coalition, Integrated Social Development Centre, Institute for Energy Security (IES), Civil Society Platform on Oil and Gas (CSPOG) and Imani Centre for Policy and Education, want the lawmakers to “institute a full-scale investigation into the transaction.” The purpose, they say, should be to “verify the actual cost incurred by Aker so far on the Blocks, clarify the inconsistencies in the presentations by GNPC and allow for open consultation and hearing to provide opportunities for independent expert opinions.” In 2018, Aker Energy bought the deepwater Tano Cape Three Points block from Hess Energy for $100 million, announcing plans to embark on a “significant” oil exploration and production in Ghana, Reuters reported. When Aker took over the oil blocks, it triggered what would become major amendments in the Petroleum (Exploration and production) Act, 2016 (Act 919). The CSOs say two amendments to Akers agreement tamed the regulator, the National Petroleum Commission, limiting its regulatory powers on the activities of the company. The consequence was not lost on energy experts, who believed that the changes reduced the state’s share in the partnership with Aker, and snuffed out GNPC Explorco’s involvement in the deal in a manner that would build its operating capacity. But by May 2021, the plans went south as Aker announced plans to offload part of its 50% shares. Making a case for the GNPC’s lack of capacity to be an operator, they pointed to a billion dollars sunk into the company’s operations in the last 10 years in anticipation that it would become an operator. According to them, the investment does not reflect on the field or GNPC’s balance sheet. “So far, about US$1 billion has been given to the Corporation, but it has failed to drill one well. The country needs a clear pathway for supporting the national oil company, rather than using billions of dollars of the public’s money in risky bets that might instead go to support Ghana’s health, education and economic development,” they said in a value-for-money analysis of the deal. They continued: “otherwise, the guise of the energy transition will only be a smokescreen to waste more resources and line the pockets of foreign companies and people who may be short-changing the country deliberately.” However, the then Chief Executive Officer (CEO) of GNPC, Dr. Kofi Koduah Sarpong believed the CSOs are completely being misguided because their concerns are borne out of the lack of facts and real-time information and that they must avail themselves to be thoroughly briefed on the arrangement going forward. PIAC seems to have the final say as an oversight body on behalf of Ghanaians and therefore we patiently wait for their response as soon as possible.

Related Posts

Leave a Reply

Your email address will not be published.

16 − thirteen =