The Public Interest and Accountability Committee (PIAC) has expressed worry about the inability of the Ghana National Petroleum Corporation (GNPC) to meet cash calls from Joint Venture partners, causing its partners to lift the corporation’s share of crude oil to defray these costs.
It is therefore blaming the Ministry of Finance for this challenge.
According to Section 16(4) of the Petroleum Revenue Management Act (PRMA), as amended, it is the obligation of the Minister for Finance to ensure that the Bank of Ghana transfers to a national oil company (NOC) the relevant portion of the revenue due the national oil company not later than three working days after the receipt of petroleum revenue into the Petroleum Holding Fund (PHF).
However, a report by PIAC titled “The Role of GNPC in the Upstream Petroleum Industry: Challenges and Prospects” noted that this provision has not been met several times according to the Annual Petroleum Reports of the Ministry of Finance.
“According to Section 16(4) of the PRMA, as amended, it is the obligation of the Minister for Finance to: “ensure that the Bank of Ghana transfers to a national oil company, the relevant portion of the revenue due to that national oil company under subsection (2) not later than three working days after the receipt of petroleum revenue into the Petroleum Holding Fund.” However, it has been noted in The Annual Petroleum Reports of the Ministry of Finance that this provision has not been met several times. For instance, regarding 2020 liftings, as many as 50 days and not less than 21 days elapsed from the dates of receipts into the PHF of revenues from the current oil fields to the dates of disbursement to GNPC”.
This report implied that the statutory obligation of the Minister for Finance to ensure payments to the NOC within three days of receipt of oil lifting funds in the PHF was not fulfilled.
It has been argued that the reason for the delay is that payments to the GNPC are treated as normal payments from government funds and not directly from the Petroleum Holding Fund, as the law requires.
Payments to GNPC are purposely to fund the operations of the Corporation, the development of the NOC to become a standalone operator in the industry and finance the Corporation’s cash call obligations on the producing fields based on its equity stake spelled. The PRMA assigns two funding levels to GNPC – equity financing and operational expenditure.
The PRMA mentions that the NOC is to be funded for 15 years following the start of commercial production of crude oil, following which it will no longer be supported with funds from the PHF. This means that after 2026, GNPC will no longer receive funding from the PHF.