The Public Interest and Accountability Committee (PIAC) has issued a stern warning to the Ghana National Petroleum Corporation (GNPC) regarding its financial dealings with government entities. In a decisive move, the Committee has advised GNPC to cease the provision of loans and guarantees to the government and its agencies until substantial progress is made in recovering existing debts.
According to the 2023 Annual Report on Petroleum Revenue Management released by PIAC, GNPC is currently facing a significant financial challenge, with outstanding loans and guarantees amounting to US$126.68 million. This figure forms part of a larger debt totaling US$318.09 million that government bodies owe GNPC, a situation that has been unfolding since 2011.
The report paints a troubling picture of GNPC’s financial health, noting that the total obligations to the corporation had ballooned to US$1.23 billion by the end of December 2023. This increase is attributed to additional payments and guarantees extended by GNPC over the years. In light of these figures, PIAC’s recommendation comes as an urgent call to safeguard the financial stability of the corporation and, by extension, the national petroleum sector.
“GNPC needs to double down on its efforts to recover these loans and should refrain from issuing any more guarantees to state-owned enterprises (SOEs),” the report advises. It emphasizes that the government should also reconsider its approach to financing by relying on GNPC as a lender, which exacerbates the financial strain on the corporation.
The backdrop to this financial discourse is the declining crude oil production in Ghana, which has seen a consistent decrease over the past four years. From a peak production of 71.44 million barrels in 2019, output plummeted to 48.25 million barrels in 2023, marking an average annual decline of 9.2%. This downturn is significant, reflecting challenges within the sector and underscoring the need for strategic interventions to reverse the trend.
Production figures for 2023 indicate that the majority of oil came from the Jubilee Fields, which contributed 63% of the total output. The SGN and TEN fields accounted for 23% and 14% of the production, respectively. Additionally, the production of raw gas totaled 255,171.97 MMSCF, with SGN field yielding 50% of this amount.
In response to these production challenges, PIAC has recommended that the government and relevant regulatory bodies take definitive actions to revitalize production in existing fields and to invest in untapped fields. Such measures are crucial to ensure the sustainability and growth of Ghana’s oil sector.
The release of the 2023 Annual Report by PIAC is part of its mandate under the Petroleum Revenue Management Act, 2011 (Act 815), which was amended by Act 893. The act requires the committee to publish semi-annual and annual reports to ensure transparency and accountability in the management of petroleum revenues in Ghana.
