GNPC shouldn’t be listed
The Chief Executive Officer of the Ghana National Petroleum Corporation (GNPC), Mr Alex Mould, has disagreed with suggestions that the government should convert the corporation into a limited liability company and subsequently float part of its 100 per cent shares on the Ghana Stock Exchange (GSE) in return for capital.
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He said listing the corporation would be wrong and disingenuous to the growth and survival of the corporation.
Rather than raising funds through the local bourse, Mr Mould said the corporation would use alternative fund-raising mechanisms to shore-up its balance sheet to be able to participate in big ticket transactions in the petroleum sector.
“It’s absolutely wrong [to list GNPC] because there are many ways of raising capital. For now, we aren’t considering listing,’ Mr Mould said in an interview.
The country's securities industry regulations require that institutions seeking to list on the GSE must first be limited liability companies, which means that GNPC would have to, first, be converted into a company before processes to list it can proceed in earnest.
“Right now, we are even constraint listing because we are not a company but a corporation. For us to be able to list, we will have to, first of all, become a company and that in itself has its own nuances. GNPC will decide if it wants to become a company,” the CEO added.
Listing subsidiaries
Mr Mould explained that an additional alternative to raising capital through the stock exchange was the listing of joint venture companies that the corporation would form to execute specific projects.
“For example, when we conclude the purchase of Ghana Gas, part or the whole of Ghana Gas can be put on the stock market in the future. But for GNPC itself as the holding company, I don't think we will be doing that.”
“GNPC is an arm of the government to do exploration work and we will continue doing that," he added.
He also hinted of additional partnerships between the corporation and companies in the petroleum sector value chain aimed at growing its balance sheet.
World-class operator
Proposals on the need to list GNPC on the local bourse resurfaced recently after the corporation unveiled a five-year ambitious investment plan detailing how much it intends to invest over the period.
In the plan, GNPC's investments in the three major projects – the Jubilee, Tweneboa-Enyenra-Ntomme (TEN) and the Sakofa Gye-Nyame projects – were estimated to rise from US$210.9 million in 2015 to US$948.6 million in 2018, when earnings hit US$1.18 billion.
In 2019 and 2020, the corporation's oil sector costs were projected at US$947.1 million and US$937.7 million respectively.
Earnings, on the other hand, was predicted to rise from US$217.9 million in 2015 to peak at US$1.24 billion in 2019, before dropping to US$1.2 billion in 2020, according to the plan.
The five-year plan was to help lay a solid foundation for the corporation to achieve its short-to-medium term ambition, which is to become “an independent operator in seven years and a world-class operator within 15 years.”
Although Mr Mould admitted that the plan required huge capital outlay to execute, he said the net-worth nature of the project made it easier to finance.
“Our investment plan requires a few things. One of them is; all the projects we are doing are net present value (NPV) positive – they have high rate of returns and that means that they will pay for themselves.”
“So, if you have a project that pays for itself, then you should be able to put some equity down and raise some money from the banks, the capital market or even get investors to form joint ventures with GNPC to do this,” he explained.
Core mandate
While disagreeing with suggestions that GNPC was straying into areas that are not its traditional sectors, Mr Mould said the corporation's status as a national oil company meant that its core mandate covers appraisal, exploration, production and disposal.
"So, if I'm disposing off my gas, I can enter into a company to dispose that gas. I don't have to dispose of it at the well head. I can dispose of it by going down the value chain."
“For example, gas goes into power. GNPC can decide to form power companies because that power company is basically going to dispose off the gas; it’s going to use the gas to produce electricity,” he added.
Generally, the CEO said the corporation sees gas as “future electricity" hence either decision to give it priority and attention.
“The issue is: are they the right investments? Are we losing money? Is there accountability? Is there good governance? And this is what GNPC is trying to portray; that it is the most scrutinised organisation in Ghana currently.”
“To do that, we have to make sure that we are entering into positive rate of returns enterprises. We can't go into a venture as a social intervention; that is not what GNPC was mandated to do,” he emphasised.
The corporation, which was formed in 1984 as a national oil company, is currently made up of the GNPC Exploration and Production Company (Explorco) and the GNPC Oil and Gas Learning Foundation (GNPC OGLF), which are wholly-owned subsidiaries.
It also owns 30 per cent of the GNPC-Technip Engineering Services Limited, 90 per cent of the Prestea Sankofa Gold Limited, 45 per cent of the Saltpont Offshore Producing Company, 60 per cent of the Mole Motel in the Northern Region and 25 per cent of Airtel Ghana Limited, the telecommunications service provider.
Survival of the corporation
Rather than raising funds through the local bourse, Mr Mould said the corporation would use alternative fund-raising mechanisms to shore-up its balance sheet to be able to participate in big ticket transactions in the petroleum sector.
“It’s absolutely wrong [to list GNPC] because there are many ways of raising capital. For now, we aren’t considering listing,’ Mr Mould said in an interview.
The country's securities industry regulations require that institutions seeking to list on the GSE must first be limited liability companies, which means that GNPC would have to, first, be converted into a company before processes to list it can proceed in earnest.
“For us to be able to list, we will have to, first of all, become a company and that in itself has its own nuances. GNPC will decide if it wants to become a company,” the CEO added.
Listing subsidiaries
Mr Mould explained that an additional alternative to raising capital through the stock exchange was the listing of joint venture companies that the corporation would form to execute specific projects.
“For example, when we conclude the purchase of Ghana Gas, part or the whole of Ghana Gas can be put on the stock market in the future. But for GNPC itself as the holding company, I don't think we will be doing that.”
“GNPC is an arm of the government to do exploration work and we will continue doing that," he added.
He also hinted of additional partnerships between the corporation and companies in the petroleum sector value chain aimed at growing its balance sheet.
World-class operator
Proposals on the need to list GNPC on the local bourse resurfaced recently after the corporation unveiled a five-year ambitious investment plan detailing how much it intends to invest over the period.
In the plan, GNPC's investments in the three major projects – the Jubilee, Tweneboa-Enyenra-Ntomme (TEN) and the Sakofa Gye-Nyame projects – were estimated to rise from US$210.9 million in 2015 to US$948.6 million in 2018, when earnings hit US$1.18 billion.
In 2019 and 2020, the corporation's oil sector costs were projected at US$947.1 million and US$937.7 million respectively.
Earnings, on the other hand, was predicted to rise from US$217.9 million in 2015 to peak at US$1.24 billion in 2019, before dropping to US$1.2 billion in 2020, according to the plan.
The five-year plan was to help lay a solid foundation for the corporation to achieve its short-to-medium term ambition, which is to become “an independent operator in seven years and a world-class operator within 15 years.”
Although Mr Mould admitted that the plan required huge capital outlay to execute, he said the net-worth nature of the projects made it easier to finance.
“Our investment plan requires a few things. One of them is; all the projects we are doing are net present value (NPV) positive – they have high rate of returns and that means that they will pay for themselves.”
“So, if you have a project that pays for itself, then you should be able to put some equity down and raise some money from the banks, the capital market or even get investors to form joint ventures with GNPC to do this,” he explained.