Ghana bags $US5.2bn in oil money since 2011- NRGI report

Adnan Adams Mohammed 

Data available indicate that since Ghana's first oil cargo lifting (sales) in 2011, about 73 cargos have been sold to date.

This has given the country total revenue of about US$5.2 billion(US$5,181,155,299) in oil money for total volume of 71,120,148 bbls, the Natural Resource Governance Institute (NRGI) has said in its newest report on Ghana's oil industry.

From this, 9% of government's revenue in 2019 was from GNPC’s oil sales in value of US$938 million. Around US$802 million of this amount, or 86%, came from cargos of oil sold by GNPC. The NRGI report titled "Ghana’s Oil Sales: Using Commodity Trading Data for Accountability" demonstrates how these data can be used by civil society organizations (CSOs), government officials, journalists and other oversight actors to hold the government, GNPC and trading companies accountable.

“Our research demonstrates the importance of the government’s long-term sales contracts as a source of government revenues,” says Denis Gyeyir, a co-author of the report and the NRGI Africa Program Officer.

 

However, he called on the Ghana government to disclose its long-term sales contracts agreements.

 

“The precise terms within long-term sales contracts agreements, such as those signed with Unipec Asia and Litasco, are very important in determining whether they represent a good deal for the country. We commend the government for its release of information on the terms of the agreement with Unipec Asia, but officials should disclose the long-term sales contracts with both Unipec Asia and Litasco in their entirety, and commit to disclosing any future similar agreements.”

 

The coronavirus pandemic and oil price crash have hit this important source of government revenue hard, with the funds received for similarly-sized cargoes sold by GNPC dropping from $126 million in 2012 to just $12 million in April 2020.

 

“The impact of the coronavirus pandemic and oil price crash on Ghana’s economy means that ensuring GNPC maximizes its oil sales revenues is more important than ever,” says Nafi Chinery, West Africa manager for NRGI. “Oil sales transparency on the part of GNPC and the government has been an important step toward enabling citizens groups to demand effective and accountable management of revenue flows. Information on Ghana’s long-term sales contracts tied to resource-backed borrowing is especially important in the context of broader debt relief and renegotiation discussions.”

 

Two international oil traders operating in Ghana, Trafigura and Glencore, have disclosed their payments to the state. However, no company has provided payment data disaggregated by cargo, which NRGI maintains is necessary if citizens are to use this data for accountability purposes.

 

“Commodity traders purchasing the state’s oil in Ghana should follow the example of the government and GNPC and disclose information on their purchases on a cargo-level basis,” says Alexander Malden, co-author of the report. “We call on traders to disclose cargo-specific payments to GNPC using the new Extractive Industries Transparency Initiative (EITI) Guidance for buying companies and relevant template in order to build citizen trust in and understanding of this often opaque activity.”

 

The report, which indicated that, Ghana is one of the most transparent countries in reporting on its commodity trading activities, praised Ghana National Petroleum Corporation (GNPC), the Ministry of Finance, the Bank of Ghana, the Public Interest and Accountability Committee and Ghana Extractive Industries Transparency Initiative for disclosing information on the state’s oil sales activities.

 

While Ghana is a new oil producer, oil sales are already a significant source of government revenue. Significance of oil sales to government revenue likely to increase as more production comes online.

 

A presentation on the NRGI findings pointed, at least, four reasons why crude oil trading sector is particularly susceptible to corruption and the reasons  Involves large financial transactions, with the average cargo being around 950,000 barrels and able to cost well over USD 100 million; and State owned enterprises (SOEs) often have a great deal of discretion in conducting a state’s commodity trading activities, creating opportunities for individuals to abuse their public position for private gain.

 

Other reasons are: Sector remains highly opaque and less scrutinized than a state’s extractive activities; and Trading transactions are not subject to the same regulations or international standards as upstream activities.