$700m Scandal Rocks GNPC

Some Members of Parliament (MPs) are calling for immediate investigations into the circumstance under which the Ghana National Petroleum Corporation (GNPC) acquired $700 million from the Deutsche Bank of Germany.

The loan, which is supposedly intended to be used for oil & gas exploration and development, has raised hairs at the Finance Ministry.

About $350 million of the said money was expected to be disbursed to GNPC yesterday.

The corporation is expected to pay the loan within the next five years with the lenders ready to lift Ghana's oil for payment.

GNPC boss, Alex Mould, recently told Reuters in London that the State oil company had secured $700 million and that more was to come.

“We are waiting for TEN (Tweneboa, Enyenra, and Ntomme) to come on-stream, and most likely by the end of next year, early 2016, we should be able to raise another $500 million mostly from capital markets but also from banks,” he said.

GNPC's Vision
What seems to have provoked the issue is the fact that GNPC, which has its vision 't o lead the sustainable exploration, development, production and disposal of the petroleum resources of Ghana, by leveraging the right mix of domestic and foreign investments in partnership with the people of Ghana,' is said to be having whopping $200 million of cash in its coffers and does not need $1.2 billion for any such exploration.

Leading the charge are Manhyia South MP, Dr Matthew Opoku Prempeh, popularly called Napo, his colleague MP for Obuasi West, Kwaku Kwarteng and Gabby Otchere-Darko, former Executive Director of policy think-tank, Danquah Institute.

The three believe the circumstance under which the loan facility was acquired, apart from not going through Parliament, was riddled with suspicion.

Kwaku Kwarteng, told Joy FM that GNPC could not borrow without the approval of Parliament; and is asking the Finance Committee of Parliament to look into the matter.

Procurement Act
'As a State-owned company that does not pay corporate taxes to government, its procurement of goods and services must fall under the Procurement Act,' he averred.

'If the information we have gotten is true, then what the GNPC has done is wrong,' the Obuasi West MP stated.

Speaking on various radio networks yesterday, Gabby Otchere-Darko said 'the purpose of this loan is vague and unconvincing.'

Even though the money is intended for capital investment for exploration and production, Gabby claims his sources at the Deutsche Bank had also expressed similar reservations over exactly what GNPC needed the money for.

That, he said, was because 'it [referring to GNPC] currently has enough money for any exploration work that it needs to do' and that 'the normal practice has been that production contributions from GNPC are pre-financed by its equity partners of the oil fields concerned and, certainly, at a lower cost than the nearly 4% plus Libor which is the interest on this loan.'

Purpose
Mr Otchere-Darko suspects that the actual purpose of the loan is not what is apparent on the face of the loan agreement. He believes it could just be another way of raising money for government business.

Gabby was particularly critical of the nature and integrity of the facility; one of which he said included the capacity in which GNPC contracted the loan independently. That, he said, was because under the Petroleum Revenue Management Act, GNPC has to bring its annual programme and budget to Parliament for approval.

He therefore asked rhetorically, 'How come this loan has escaped the attention, scrutiny and prior approval of Parliament?

'How come this loan and the purposes of it were not part of the programme and budget submitted to Parliament by GNPC in 2014 for approval?'

Mr Otchere-Darko asked President John Mahama to as a matter of urgency, take a second look at the circumstance surrounding the loan acquisition since GNPC is a wholly state-owned asset whose activities and operations must be carefully scrutinised before any commitments are made.

His other major concern was that 'This $700 million five-year prepayment financial facility effectively mortgages Ghana's share of oil production from now to 2019 because oil is being used both for repayment and as collateral.'

Apart from that, he noted, 'It has predetermined for Parliament for what we must use the bulk of our oil revenues from now until 2019.'

Priority Access
He was therefore of the firm conviction that 'This international transaction will give direct access of our share of oil produced domestically to the leading commodities trader, Trafigura, as payment for the loan.'

Already, the former Danquah Institute boss had maintained, 'Sinopec of China has priority access to our oil because of the $1 billion suppliers' credit agreement with Ghana for the development of the Atuabo Gas Plant,' even though the credit facility was approved by Parliament.

'It is a dangerous practice for the nation to be railroaded to commit to a billion dollar loan facility without any Parliamentary scrutiny and the basic expectations of transparency required for such transactions. I think this facility raises serious questions,' he emphasised.

By Charles Takyi-Boadu