The Public Interest and Accountability Committee (PIAC) is advocating for a significant overhaul of the 41-year-old legislation that established the Ghana National Petroleum Corporation (GNPC).
The committee contends that the Provisional National Defence Council Law (PNDCL) 64, which brought GNPC into existence in 1983, no longer corresponds to the dynamics of Ghana’s flourishing upstream sector.
In its most recent issue paper published on its website, PIAC emphasizes the necessity of updating the legislation to tackle GNPC’s challenges, enhance its efficiency within the sector, and align it with contemporary international industry standards.
The paper said “The law was established at a time when there was no petroleum activity and GNPC was used as a special purpose vehicle (SPV) to begin prospecting for economic activities in the industry.
“The industry has since that time evolved into a thriving one with three production fields (Jubilee, TEN, Sankofa), as well as new fields coming on stream (Jubilee South-East) and several other offshore explorations at various stages of development and onshore exploration (Voltaian Basin).”
According to PIAC, the revision of the law would fortify the core operations of GNPC by streamlining activities to improve efficiency, productivity, and reliability, while concurrently reducing costs and emissions.
PIAC asserts that this revision would also facilitate GNPC’s expansion into emerging energy sectors, such as renewables and low-carbon technologies. This diversification aims to capitalize on existing capabilities, access new markets, and enhance environmental, social, and governance performance.
Furthermore, PIAC emphasizes that the review process would transition GNPC into an integrated energy provider, offering comprehensive energy solutions such as electricity generation, distribution, and energy management. This transformation is crucial to meet evolving market demands and broaden the corporation’s footprint in the energy sector.
Another pressing issue highlighted by PIAC is GNPC’s reliance on time-limited funding from the Petroleum Holding Fund (PHF). The committee cautions that GNPC must develop strategic plans to ensure long-term financial sustainability.
As per the Petroleum Revenue Management Act (PRMA), GNPC’s access to PHF funds will cease 15 years after the start of commercial production, expected to conclude in 2026. PIAC criticizes delays in releasing PHF funds to GNPC, leading to challenges in meeting financial obligations to joint venture partners and affecting the corporation’s financial performance.
PIAC notes that GNPC’s balance sheet is encumbered by substantial guarantees and receivables owed by the government and state-owned entities, totaling over $1.14 billion. Urgent measures are needed to recover these amounts to enable the corporation to operate effectively.
Additionally, PIAC expresses concerns about GNPC’s governance structure, where the board’s appointments are solely controlled by the Energy Minister. This structure, according to PIAC, exposes GNPC to political influence, potentially compromising technical competence and strategic direction.
In light of these challenges, PIAC emphasizes the critical need to revise the legal framework and enhance institutional capacity to enable GNPC to operate as a robust standalone operator. Failure to address these issues, PIAC warns, could hinder Ghana’s ability to maximize its hydrocarbon resources amidst the global energy transition.