The planned US$620 million loan from Lukoil International Trading and Supply Company (LITASCO) SA to the Ghana National Petroleum Corporation (GNPC) will be forwarded to parliament for consideration next month, according to the Ministry of Energy.
The ministry explained that GNPC has initiated the process and has already received board approval. Following this, both the sector ministry and the Ministry of Finance have provided their ‘no objection’ and granted their approval in accordance with the Public Financial Management Act (PFMA).
The ministry further stated that the loan request will be submitted to parliament in mid-October when the legislative body reconvenes.
“From the foregoing, it is clear that GNPC needed to meticulously finalise the facility’s terms and conditions and obtain necessary procedural approvals ahead of the final parliamentary approval,” it stated.
The ministry issued the statement in response to concerns voiced by minority lawmakers regarding the government’s handling of the deal.
It should be noted that GNPC, as part of its 2023 work-plan presented to parliament, included efforts to refinance the LITASCO SA loan facility, which would involve incorporating bank guarantees in support of the Karpower Barge project. In the plan submitted to parliament, GNPC outlined its intentions to arrange a ‘pre-export financing facility’ of up to US$500 million, as well as a bank guarantee amounting to US$120 million.
However, John Jinapor, the Ranking Member of the Mines and Energy Committee, expressed apprehensions that the government is exerting undue pressure on GNPC to secure the facility.
“The Presidency is using coercive force to compel the GNPC to proceed and execute this loan agreement without parliamentary approval. This is unconstitutional, this is unlawful – and this is a blatant disregard to the directive and resolution of parliament”.
“If you (GNPC) proceed with this directive, you will be committing an illegality. You do not have the mandate and the power to enter into such an agreement without parliamentary approval. The minority wishes to serve notice that we shall use every necessary tool available to ensure that the right thing is done,” he said.
A deed of indebtedness on the Jubilee Oil Holding Limited (JOHL) crude oil supply and purchase deal, prepayment facility agreement, and guarantees facility agreement were also intercepted at the GNPC board level, he claimed.
“The key has to do with the fact that GNPC is raising this facility from LITASCO, and in return they are giving our oil out to this company for the next five-and-a-half years. Indeed, all the oil in the TEN Oil Field has been encumbered including royalties; and our carried and participating interests will be escrowed into this company,” he said.
During a press conference held in Accra, the parliamentary minority expressed concerns about the lack of transparency regarding the utilization of the loan. They argued that, apart from debt repayment, there is insufficient justification for obtaining a US$431 million loan that would tie up resources for the next five-and-a-half years. They also cautioned that this could potentially encumber the entire oil production from the TEN field.
However, the Ministry of Energy contends that GNPC’s annual work program, including any necessary loans for program execution, is approved by parliament.
“It is important to state that this particular facility that the minority mischievously makes allusion to is being re-financed for the sixth time”.
According to the statement, the Mines and Energy Committee of parliament has since requested that the loan’s terms and conditions be presented before the legislature in accordance with the house’s supervision powers.
“Government actors in this matter have no intention of hiding any part of the process in secrecy,” the energy ministry further assured.