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Mr Boakye Agyarko, Minister of Energy
Mr Boakye Agyarko, Minister of Energy

GNPC must not be cash cow — Energy Minister

The Minister of Energy, Mr Boakye Agyarko, has told the Public Accounts Committee (PAC) that the Ghana National Petroleum Corporation (GNPC) was, in the past, used as a cash cow to support other government entities to provide guarantees and liquidity for specific purposes.

The “co-mingling of assets of the GNPC with others was not healthy,” he stressed at the committee’s sitting in Accra on Monday.

Mr Agyarko, therefore, called for the proper documentation of guarantees for state entities, instead of a minister just directing the GNPC to assist those entities.

“We have to ensure each entity stands on its own to ensure the viability of each other without cross subsidisation,” he added.

GNPC

Answering questions on the audit of the operations of its petroleum partners, the Managing Director of the GNPC, Dr K. K. Sarpong, said the first draft audit was out.

He said the first comprehensive audit of the petroleum operations under the Deepwater Tano and the West Cape Three Points petroleum agreements (PAs) and the Jubilee Unit Operating Agreement was conducted by a team of consultants led by Pricewaterhouse Coopers (PwC) between 2015 and 2016.

He said the audit, which cost $4.8 million, was commissioned by the ministries of Finance and Energy and the cost was borne by the GNPC.

Dr Sarpong told the committee that the audit, which covered activities between 2008 and 2014, assessed the operators’ compliance with relevant laws and petroleum agreements.

He said the report was at the draft stage and that the GNPC had withheld final payment pending the outcome of the final report.

He said although the final report was yet to be released, the GNPC had begun implementing recommendations in the draft report.

Liabilities

Asked why the GNPC’s liability jumped from GH¢33 million to more than GH¢300 million, the Chief Operating Officer (COO) of the company, Mrs Comfort Aniagyei, said the figure ballooned as a result of the GNPC’s trading activities with the Bulk Oil Storage and Transportation Limited (BOST).

“It has to do with our trading with BOST. Products are being imported for sale. Until the products are sold and the money paid, they are a liability. The amount represents products sold to us,” she explained.

Dr Sarpong interjected and said: “When you read it together with assets, you will realise the figure has reduced.”

GRIDCo

When he took his turn, the Chief Executive Officer (CEO) of the Ghana Grid Company (GRIDCo), Mr William Amuna, told the committee that the government owed the company GH¢600 million for power supplied to its agencies across the country.

He said the Electricity Company of Ghana (ECG), continued to build up its indebtedness to GRIDCo.

Answering questions, he said GRIDCo could not disconnect places such as Parliament, hospitals and security installations across the country because they were state agencies.

Disconnecting state entities owing GridCo, he noted, would stall activities in the country.

“I know the government of Ghana is coming up with arrangements to settle debts within the sector,” he told the committee.

He said GridCo, however, disconnected private entities such as the mines when they failed to pay for the power supplied them.

VALCO debt

Mr Amuna said the Volta Aluminium Company Limited (VALCO) owed GRIDCo $20 million and added “we are banking our hopes on the government of Ghana to get our money to operate”.

He told the PAC that his outfit billed the ECG GH¢13 million a week but the ECG was able to pay only GH¢8 million weekly.

He said the ECG had improved its mode of payment to the GRIDCo and expressed the hope that it would continue to improve.

Solution

Mr Amuna said the ministries of Energy and Finance had set up a team that was looking at the settlement of government debts to the power producers and distributors.

He disclosed that the stakeholders in the power production and distribution sector owed one another and noted that there was the need for a holistic arrangement to ensure that all the companies went back to their “correct footing”.

He pegged power distribution losses at 30 per cent and called for “innovative ideas to reduce the losses”.

Touching on power theft, he said the practice was common in Ghana and described it as unfortunate.

The CEOs of the Ghana Cocoa Board, the Social Security and National Insurance Trust and the Energy Commission took turns to answer questions before the PAC.

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