The Technical Manager of the Public Interest and Accountability Committee (PIAC), Mark Agyemang, has said the national oil company, Ghana National Petroleum Corporation (GNPC), will struggle to become independent if it continues to engage in quasi-fiscal activities.
The national oil company, which receives a portion of the country’s annual petroleum revenues for its operations, is expected to be weaned off the revenues in a few years as it bids to become an independent oil company.
According to the Petroleum Revenue Management Act (PRMA), the national oil company should start paying dividends to government from 2026, which will be 15 years after the country started commercial oil production.
But in an interview with Business24, Mr. Agyemang stated that GNPC needs to prioritise its operations and desist from making significant investments into areas which are not part of its core mandate.
“GNPC is aware that a time will come when they will need to put more responsibilities on themselves, diversify their investment portfolio, and be in a profit-making position and pay dividend to the state. They cannot continue to live off the largesse of the state,” he said.
“Without the meddling of government and other state-owned agencies, GNPC would have been in a good financial position. Currently, guarantees alone to other state-owned enterprises are getting close to US$600m. And this is besides the quasi-fiscal expenditures undertaken by GNPC on behalf of government,” he added.
PIAC’s Technical Manager also mentioned that GNPC’s expenditure on corporate social investment remains high, increasing from GH¢41.49m in 2018 to GH¢49.98m in 2019.
According to PIAC’s 2020 Annual Report, GNPC spent nearly 72 percent of its budget for activities relating to petroleum exploration and production on Sustainability and Stakeholder Relations, and on its Foundation.
He argued that there is the need for Parliament to consider placing some restrictions on the proportion of GNPC’s budget spent on corporate social investment and guarantees to state institutions, particularly in the light of the corporation’s inability to respond to some of their cash calls.