The Ghana Extractive Industries Transparency Initiative (GHEITI) has strongly advocated for the inclusion of the Ghana National Petroleum Corporation (GNPC) in the Ghana Stock Exchange (GSE).
GHEITI has put forth the argument that having the state-owned oil company listed on the stock market would facilitate the generation of substantial capital, enhance its corporate governance framework, and ultimately support its goals as an independent operator and its aspirations for diversification.
As a globally recognized standard for enhancing transparency and accountability in the oil, gas, and mining sectors, GHEITI expressed confidence in its proposal to list the corporation on the GSE.
If taken into consideration, this move could potentially be the most pivotal step in transforming GNPC’s prospects and establishing it as a capable national oil company with an international reputation.
Dr. Steve Manteaw, GHEITI’s Co-chair, highlighted that the stringent accounting, auditing, and transparency standards required for stock market listing would address persistent issues like political intervention and excessive quasi-fiscal expenditures, among other challenges.
“We have done this before and we can do the same with GNPC. A similar situation occurred when SIC Insurance PLC was not making any gains and government at the time wanted to sell 70 percent to a strategic foreign investor – but CSOs kicked against it, asking for the company to get listed and that was done. The same thing happened with GOIL, and today the company is a market leader. So we have done it before and we can do it again,” he explained.
The proposal was made during a GHEITI workshop on the 2020 oil and gas, as well as mining sector reports held in Aburi, Eastern Region.
He added that the stock market remains the best route to getting the best out of the company without jeopardising the state’s interest in it as a strategic public entity in the upstream petroleum sector. The move will also position the GNPC to maximise returns from the country’s hydrocarbon resources.
Citing the Ghana Commercial Bank – now GCB Bank PLC – as another success from opening up the ownership of struggling state-owned firms for private participation, Dr. Manteaw said the lender’s marked turnaround is there for all to see.
Misplaced priority
The call for improved management of the GPNC is not new. The Public Interest and Accountability Committee (PIAC) – a public watchdog over the use and management of petroleum revenues, in its 2022 annual report highlighted that GNPC engaged in several quasi-fiscal expenditures such as road construction, Astro-turf constructions and funding traditional festivities among others, to the detriment of its core mandate.
As a result, in 2022 GNPC’s expenditure on various line items such as capital projects and administration witnessed a significant increase of over 200 percent.
Since 2014, GNPC has spent over US$124.66million on constructing roads in the western corridor enclave, which is a primary responsibility of the central government and not a national oil company PIAC said.
GNPC’s financial standalone by 2026 is impossible
It will be recalled that in September 2022 Dr. Manteaw expressed worry over GNPC’s preparedness to be weaned off government support by 2026 as stipulated by its law, insisting that the company was not putting in place enough measures to that effect.
Government, as required under the Petroleum Revenue Management Act (PRMA), Act 815 section 7 (3), is to provide financial support to the corporation for 15 years from the date of promulgating the Act in 2011 – which ends in 2026.
However, with just about three years to reach the stated timeline, the corporation has over the years not managed its operations and revenues efficiently to be able to make a profit or even pay a dividend to the state.
Against this backdrop, Dr. Manteaw is concerned that if stringent measures are not taken to get the company listed on the stock market – to ultimately ensure accountability and rid it of political interference immediately – its standalone operator ambition for 2026 will remain a fantasy.