The Public Interest and Accountability Committee (PIAC) has called on the government of Ghana to expedite efforts to expand gas infrastructure to accommodate increased raw gas production. This recommendation was highlighted in PIAC’s 2024 report on petroleum revenue utilization, which provided a detailed assessment of the upstream petroleum industry and outlined key areas of improvement.
Observations from the Report
The report revealed a significant growth in Ghana’s petroleum revenues, increasing by 27.8% from US$1.06 billion in 2023 to US$1.36 billion in 2024. This surge, attributed mainly to improved global pricing, marks the second-highest annual petroleum revenue since the inception of Ghana’s oil industry, following the record set in 2022 at US$1.42 billion.
Despite this positive trajectory, PIAC identified critical gaps in the management of petroleum revenues. For instance, proceeds from Ghana National Petroleum Corporation’s (GNPC) Explorco operations in 2024, totaling US$145.7 million, were not paid into the Petroleum Holding Fund (PHF). Cumulatively, unpaid revenues held by JOHL and GNPC Explorco reached US$488.79 million by the end of 2024.
GNPC contends that revenues from Explorco liftings do not qualify as payments into the PHF. However, PIAC reaffirmed its stance that these proceeds constitute indirect state participation and must be deposited into the PHF as stipulated by law.
Outstanding Surface Rental Arrears
The report also highlighted significant arrears in surface rental payments by International Oil Companies (IOCs), amounting to US$2.89 million at the close of 2024. Notably, 60% of these arrears are linked to three companies whose petroleum agreements were terminated in 2021. PIAC urged the Ghana Revenue Authority, the Petroleum Commission, the Bank of Ghana, and the Ministry of Energy to coordinate efforts to recover these funds.
Unrecovered Gas and Infrastructure Challenges
Another major concern was the inability to recover 1,186.81 million standard cubic feet (MMSCF) of Make-Up Gas (MUG) from the SGN Field in 2024, resulting in the forfeiture of paid raw gas that could have been utilized. PIAC emphasized the urgent need for the government to enhance gas infrastructure capacity to prevent such losses in the future.
Recommendations
PIAC proposed the following measures to address the identified challenges:
1. Expand Gas Infrastructure: The government must prioritize the development of gas infrastructure to handle increased volumes of raw gas and ensure efficient utilization.
2. Recover Surface Rental Arrears: A coordinated approach involving key stakeholders is necessary to recover outstanding arrears from IOCs.
3. Ensure Revenue Transparency: All proceeds from GNPC Explorco operations should be paid into the Petroleum Holding Fund to ensure compliance with Ghana’s petroleum revenue laws.
Conclusion
While Ghana’s petroleum sector continues to experience revenue growth, PIAC’s report underscores the importance of addressing systemic issues to maximize resource utilization and revenue accountability. Expanding gas infrastructure, recovering arrears, and ensuring strict adherence to revenue management laws will be crucial in achieving these goals.
Story by: Mercy Addai Turkson #ahotoronline.com
