The Public Interest and Accountability Committee (PIAC) has asked government push the Volta River Authority (VRA) to pay more than $306 million it owes the Ghana National Gas Company (GNGC).
The Committee warns in its latest report that the debts could hit unimaginable limits if the power producer does not move to clear it.
The report, which covers the first half of 2016 reveals that total debt owed Ghana Gas by State institutions as at June 2016 was $340.49 million with VRA alone accounting for 89.9% ($306.10 million) of the outstanding balance.
Also, the total interest payable by VRA on its outstanding debts amounted to $2.86 million in the first half of 2016, PIAC revealed.
PIAC said it is concerned “about the ever-growing indebtedness of state institutions to [Ghana Gas], which is not only depriving the Petroleum Holding Fund (PHF) of much-needed inflows but is also beginning to compromise the ability of the [Ghana Gas] to commence the scheduled amortisation of the approximately US$1 billion CDB loan facility that was contracted by the Government of Ghana (GoG) for the construction of the Atuabo Gas Processing Plant.”
The report also revealed that crude oil production from the Jubilee field declined by 40% from 19.08 million barrels in mid-year 2015 to 11.44 million barrels over the same period in 2016.
“The decline in production was caused by a combination of scheduled shutdown of the FPSO for routine maintenance and a faulty turret bearing which led to the suspension of oil production for up to 50 days,” the report explains.
Aside from urging the Finance and the Energy ministries to ensure that VRA pays its debt to Ghana Gas in order to prevent the debts from “spiralling out of control and thereby compromising the financial integrity and viability of [Ghana Gas]”, the report also recommends that the gas company take preemptive measures.
“The GNGC should consider fast-tracking the interconnection of its onshore pipeline to the West African Gas Pipeline to create new market for its lean gas so that in the event that VRA continues to default in honouring its obligations, the lean gas could be channelled to the new markets that would become available by virtue of the interconnection” the Committee recommends.
PIAC is a statutory institution charged with ensuring efficient, transparent and accountable management of Ghana’s petroleum revenues and investments.
Its latest report also warned the Ghana National Petroleum Corporation (GNPC) to desist from financing infrastructure projects with funds allocated to it from petroleum revenues.
“PIAC proposes that any outstanding payment(s) to be made in respect of the Western Corridor Road project must be paid from the allocations to the Roads and Other Infrastructure priority areas,”
Click here to read the full report.