GHEITI raises concerns over $164m loan to GNPC
In its latest report on the Oil and Gas Sector, the Ghana Extractives Industries Transparency Initiative (GHEITI) has raised significant legal concerns regarding the granting of a $164 million loan to the Ghana National Petroleum Corporation (GNPC). The loan, provided through the Jubilee Oil Holdings Limited (JOHL) acquisition, has been deemed unlawful as it was executed without the necessary approval from Parliament.
The GHEITI Report points out that this loan transaction violates Article 181(1)(2)(3) of the 1992 Constitution and Section 57(1)(f) of the Public Financial Management Act, 2016 (Act 921). The absence of a loan agreement specifying the tenure and terms of repayment further complicates the matter, as the transaction was solely based on written communication between the Ministry of Finance and GNPC, according to the report.
Moreover, the GHEITI Report reveals that checks at the Registrar of Companies indicate that JOHL was registered in Ghana as an external (foreign) company on August 15, 2022, with a presence in the country. This raises concerns since, at the time of the loan acquisition, JOHL had not been registered to conduct business in Ghana. Furthermore, the report highlights that the Petroleum (E&P) Act, 2016 (Act 919) necessitates the incorporation of a local company to hold interest in a petroleum block.
Consequently, the acquisition of a stake and subsequent lifting of crude oil by JOHL, prior to its incorporation in Ghana, is in direct violation of Section 70(1)(a) of Act 919, which mandates the incorporation of a local entity to engage in petroleum activities within the country.
Adding to the complexity of the situation, the GHEITI Report reveals that despite GNPC’s assurance of transferring JOHL’s interests to Explorco, GNPC has yet to fulfill this commitment. If the current arrangement remains unchanged, JOHL will continue to lift and sell crude oil while bearing the cost of funding its commercial interests in the two fields as a subsidiary of GNPC, the report states.
In light of these findings, the GHEITI report echoes the recommendations of the Auditor-General’s report on procurement breaches reported in 2020. It urges GNPC to provide clear timelines for the transfer of JOHL’s interests to Explorco, emphasizing the need for transparency and compliance in order to uphold industry standards and regulatory frameworks.
This revelation by the GHEITI report sheds light on the intricate legal intricacies surrounding the GNPC’s loan acquisition through JOHL and calls into question the corporation’s adherence to constitutional provisions and financial management regulations. As stakeholders and the public await further developments, it becomes crucial for GNPC to address these concerns and take the necessary steps to ensure transparency, accountability, and compliance within the oil and gas sector.
