NRGI urges GNPC to adapt operations to energy transition to mitigate risk of stranded assets
As a relatively new oil-producing country, Ghana faces the risk of stranded assets and betting big with public money that could have alternative uses for other sectors of the economy, says the Natural Resource Governance Institute (NRGI).
To mitigate the risk of having stranded assets, the NRGI in its recent survey of 15 National Oil Companies (NOCs) in Sub-Saharan Africa, Latin America and, Middle East and North Africa, noted that by embracing the energy transition and strategically adapting their operations, the GNPC can not only contribute to the country’s and global climate goals but also secure their long-term viability in a changing energy landscape.
According to the NRGI, the GNPC would need to adopt a strategy that prioritizes efficient spending, long-term planning, investment, value maximization and cost reduction. The NOC will also need to develop a robust risk mitigation strategy and commit to transparency and accountability as a way of building trust among stakeholders and potential partners and investors.
“The GNPC has an energy transition plan in place, but in the case that they didn’t, what is going to happen is that the GNPC will be left with stranded assets. They will have assets that they cannot produce, and they will not be relevant in the next few decades, because they will not be a player in the industry that they operate. What it also means is that we are going to have investments that will be locked in, monies will be pumped into GNPC for the purposes of investments and for the purposes of exploration, and those revenues will not yield profitable returns,” said Dennis Gyeyir, Senior Africa Programme Officer of the NRGI.
According to the National Energy Transition Committee (NETC), Government is looking to raise a total amount of $250bn to fund its energy transition plan from fossil fuels to renewable energy.
The projected $250bn funds, is to be raised over the next 50 years.
Callistus Nero, a member of the NETC, speaking at the policy dialogue, noted the anticipated funds is to help Ghana transition into a net zero carbon economy by 2070.
“To entirely achieve our energy transition targets by 2070, the country will need a total of $250bn in financing from investors,” he said. Adding that, the NETC and the government at large, is yet to identify investors that will finance its energy transition plan.
“At the moment, we are planning to go on a roadshow to showcase to investors both locally and internationally, the opportunities that exist in our energy transition plans to attract them to help achieve our transition targets,” he added.
The National Energy Transition Committee (NETC), is the statutory body tasked with the mandate of developing a national policy document and strategy on steps to successfully navigate the global energy transition.
The NRGI notes that, National Oil Companies (NOCs) play a crucial role in the global energy landscape, as they control significant reserves of oil and gas resources. However, as the world transitions towards a more sustainable and low-carbon future, NOCs are likely to face numerous challenges and opportunities, particularly new producers such as Ghana.
The NRGI in its survey advocates that NOCs diversify their portfolio, invest in research and development, improve efficiency in resource management, and improve transparency and reporting to achieve sustainable operations.
The study by the NRGI is aimed at:
• Highlighting gaps in planning around the risk of the global energy transition for NOCs in specific countries that can be used in advocacy efforts.
• Promoting knowledge sharing of the approaches and strategies of different NOCs and their potential challenges.
• Providing ideas on how better management of transition risk can be achieved in line with what other NOCs are doing.
• By showing gaps in knowledge as well as good practices that can be better understood through the development of in-depth case studies.
