Experts speak on GNPC’s CSR activities…. Call for change in direction

From right to left - Ishmael Agyekumhene, former PIAC member
with Hon Armah Buah, former Energy Minister

Adnan Adams Mohammed

A development communication expert and Chairman of CSOs Budget Forum has called for the need for proper regulation of Corporate Social Responsibility (CSR) activities of the government agencies.

Geoffrey Kabutey Ocansey, in an interview as part of Economy Times and www.newsguideafrica.com serial report on the Ghana National Petroleum Corporation CSR activities, said most of their (government agencies) interventions [I am sure] are needed but let’s ensure that they properly target, fairly select beneficiaries, effectively distribute, monitor and account for these projects. He suggested that, GNPC must focus on helping Tema Oil Refinery (TOR) to operate better. “That will increase and possibly expand TOR operations and create employment for citizens.”

GNPC has come under strict energy and development experts’ scrutiny and criticism for its investments in Corporate Social Responsibility (CSR) activities over the years. This was heightened particularly in 2015 when it announced a US$3 million-a-year sponsorship package for the as headline sponsors for the national senior soccer team (Black Star) and in later part of 2019 when a board memo leaked which sought to give approval for release of over GHC4 million to some state institutions and personalities.

“On the matter of GNPC, I will suggest they focus on helping TOR to better operate. That will increase and possibly expand TOR operations and create employment for citizens”, the development communication expert said.

Mr Ocansey, when asked why his suggestion of GNPC using its CSRs to help TOR, he explained that TOR is in a better position technically to refine crude and sell locally and possibly feed the West African sub-region to start with. “The GNPC and TOR are both under the ministry of energy and that should be easy to facilitate.”

In furtherance of his explanation, he noted that, the Multi-National Enterprises (MNE, both local and international enterprises) as part of their declaration of the International Labour Organisation (ILO) advice enterprises to invest their CSR into job creation ventures. This is to better help expand and create both direct and indirect employment for citizens.

“Just imagine when TOR begins refining oil in commercial quantity. Many staff will be employed in TOR. Other job opportunities will be created along the supply chain, my humble opinion.”

In other comments on the subject of discussion, PIAC’s  statutory obligation under the Petroleum Revenue Management Act, 2011 (Act 815), as amended by Act 893, to publish Semi-Annual and Annual Reports has commended the GNPC on its CSR activities describing it as in its right direction and ‘forwarding looking’.

PIAC, in its 2018 report remarked that, expenditure analysis of the GNPC Foundation’s programmes reveals a carefully thought through strategy, aimed at complementing government’s development efforts, and at improving the socio-economic wellbeing of beneficiary communities.

“While most of the projects are concentrated in the frontline oil and gas communities, the Foundation makes some attempt to spread its activities to other parts of the country, especially in areas likely to be impacted by its onshore exploration activities, This makes the Foundation’s CSI strategy assume a forward-looking character”, it added.

The Committee was however worried about the political interference in GNPC’s operations. “There is a consistent and disturbing pattern of political interference in the affairs of GNPC, which has hindered its ability to operate effectively in accordance with good corporate governance practice.”

Ironically, the immediate passed Vice-Chairman of PIAC under whose supervision the 2018 PIAC was compiled and published, Dr Thomas Kojo Stephens has on recorded commented otherwise. He wants GNPC to cut the questionable spending of its funds on CSR activities and rather focused on its core mandate of oil exploration, development, and production.

Meanwhile, the General Manager of Sustainability Division at GNPC, Dr Kwame Baah-Nuakoh, had defended this during a radio discussion on Kasapa 102.5 FM some two months ago that, every penny distributed for CSR is worth it.

But Dr. Thomas Kojo Stephens insists that, such huge spending on CSR is not the way to go.

“It is difficult to justify these amounts which have been given for these purposes. PIAC has consistently expressed concerns about the use of money being given to GNPC that it is not being used in a judicious manner. GNPC should focus on its core mandate of exploration, development, and production that is why GNPC is given all these monies.”

He added: “We have situations where even in terms of its core activities things like responding to cash calls when we talk about cash calls we give GNPC money in terms of its operations if there’s a cash call there’s money to be paid in terms of its activities in the field. We have situations where GNPC has elected not to pay for its cash calls but have the other partners to finance its cash calls so when it comes to the next lifting instead of GNPC lifting, then the partners lift on behalf of GNPC. Why should we have situations like this when we give GNPC all these monies to finance its operations but it’s not financing its cash calls and is using about 43million alone for CSR.”

Yet, Dr Baah-Nuakoh thinks otherwise. He noted in the discussion that, “I’m [GNPC] a commercial organization and I need to buy my social license to operate.”

To make the whole GNPC CSR activities look gloomy and unsolicited, the Africa Centre for Energy Policy (ACEP), in a report it issued in the early part of last year, February 2019, raised concerns about plans by the GNPC to spend far more on Corporate Social Responsibility (CSR) than on its core mandate in 2019

ACEP shared its worry that the Corporation has become more popular in delivering development projects rather than its core mandate.

In a detailed report that analysed the GNPC’s work programme for the 2019 financial year ACEP revealed that GNPC plans to spend US$43.05 million on CSR but only US$20.3 million on its operations in the Voltaian Basin and its subsidiaries in the sector.

“This is less than 50% of what GNPC wants to spend on CSR. In recent times, the Corporation has become more popular in delivering development projects rather than its core mandate.

“While GNPC, like any corporate entity, has a responsibility towards society, it is unusual for sound corporate organizations to spend more than 10% of its cash flow (not profit) on corporate social responsibility,” ACEP stated in its report.

The energy think tank then called on Parliament not to approve any CSR budget for GNPC until the end of the fifteen-year financing window provided in the Petroleum Revenue Management Act (PRMA) has elapsed.

“This should free up funds for the Corporation to deliver on its core mandate as an upstream oil player,” ACEP said.

Nonetheless, Dr. Baah-Nuakoh argued that, “Management and board of GNPC are not dumb. ACEP has a model that feels GNPC has to follow. However, we can always engage but we can’t abandon the approach working for us.”

He added: “forget about the social needs of the people and see whether you can even drill a barrel of oil.”

Apparently, a former member of PIAC, Ishmael Agyekumhene recently called for the intervention of Parliament to redefine clearly the Corporate Social Responsibility (CSR) roles Ghana National Petroleum Corporation (GNPC) can partake.

Mr Agyekumhene, in an interview related that, during his tenure PIAC raised a lot of questions about the disbursement of monies to some of these institutions but the claims, according to him, was ignored.

He insisted that it is about time Parliament redefines the CSR areas to GNPC and set non-core mandate policies to GNPC to prevent over spending.

“GNPC sponsoring activities and projects outside their core-mandate is not new, it is very common and they have been doing this for years. PIAC always talk about it but sometimes it is believed that the projects are in the collective interest of the nation so it is brushed aside. When the GNPC gave the black Stars GHS3 Million, who questioned them”, He added.

The congruence from the experts' opinion points to an inference that, GNPC needs to ensure a paradigm shift in its direction of spending its portion of the oil revenue meant for the citizens that are allocated to it to resource it and better position the Corporation to be a lead national operator in the oil exploration and production business.