Ghana Gas debt to GNPC edges to US$1 billion - PIAC report

Adnan Adams Mohammed
The Public Interest and Accountability Committee (PIAC) has
reported that, the debt of Ghana National Gas Company Limited (GNGC) to Ghana
National Petroleum Corporation (GNPC) for gas supplied risen to over US$941
million.
According to the Committee’s 2020 semi-annual report, the
indebtedness falls on the part of GNGC’s shareholders refusing to honor their
commitments.
“Cumulative raw gas production increased significantly by 65
percent; the highest recorded half-year volume of gas produced since 2010.
Total petroleum receipts in the Petroleum Holding Fund (PHF) for the period
stood at US$322,571,265.64, indicating a decline of 11.32 percent,” portions of
the report said.
“The Ghana National Gas Company (GNGC) received US$1.78
million under the Cash Waterfall Mechanism in order to address their
indebtedness to the Ghana National Petroleum Corporation (GNPC) for gas
supplied, However, there was no payment to GNPC. Consistently, the non-payment
of gas revenue denies the PHF of its due entitlement,” the report added.
PIAC also revealed the GNPC spent only 9 percent of its
total receipts on Jubilee Fields equity financing.
This is attributed to the re-phasing of work programmes and
disagreements surrounding the Cash Calls submitted by the Operator.
PAIC is the entity established by the Petroleum Revenue
Management Act (PRMA) 2011, (ACT 815) to have oversight responsibility over the
management and utilization of Ghana’s petroleum revenues.
GNGC is the nation’s premier mid-stream gas business company
that owns and operates infrastructure required for the gathering, transporting
and marketing of natural gas resources in Ghana.
The Company has the responsibility to build, own and operate
natural gas infrastructure required for gathering, processing, transportation
and marketing of natural gas and natural gas liquids.
GNGC currently supplies gas to Volta River Authority (VRA)
and other commercial institutions for power generation and industrial use.
The report also noted that, Ghana Gas been unable to honour
its financial obligations to the Ghana National Petroleum Commission due to the
debt.
In 2019, the Ghana National Petroleum Commission delivered
gas at an invoiced amount of US$86,733,078.02, but no payment has been made
raising the total gas indebtedness to US$668,118,346.04.
“As at 30th June 2020, Ghana Gas Company’s cumulative
indebtedness to GNPC amounted to US$393,042,132 as compared to US$263,949,220
during the same period in 2019,” the report noted.
“The debt is exorbitant due to VRA’s inability to meet its
debt service obligation,” it explained further.
On the revenue side, the total indebtedness of Ghana Gas to
GNPC stood at US$54.33 million compared to US$4.23 million for the same period
in 2019.
Ghana Gas’ revenue realised from the sale of LPG and Condensates
decreased by 31.13 percent and 48.45 percent respectively.
Also, out of the invoiced amount of US$93,547,640.50, only
US$10,185,922.57 was paid Ghana Gas for the sale and transportation of lean
gas.
The report noted that the COVID-19 pandemic and its
associated effect on crude price on the world market affected revenue from
Condensate.
In one of its recommendations, PIAC advised that Ghana Gas
and GNPC should agree on a payment plan over the receipts from the Cash
Waterfall Mechanism.
“This would ensure that GNPC receives payment for 116 raw
gas supplied and makes appropriate lodgments into the PHF. Parliament should
play a critical role in this arrangement,” PIAC said.
The Cash Waterfall Mechanism is part of a wider strategy to
address the worsening energy sector debt and was approved for use by Cabinet in
2017.
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