The Africa Centre for Energy Policy (ACEP) is urging Ghana’s Parliament not to approve about US$43 million Ghana National Petroleum Corporation(GNPC) has planned to spend on its Corporate Social Responsibility (CSR) in 2019.

The energy think tank is wondering why GNPC is spending $20 million on its operations in the Voltain Basin which is less than 50% of the amount it is blowing on CSR programmes.

“Parliament should not approve any CSR budget for the Corporation until the end of the fifteen-year financing window provided in the PRMA has elapsed. This should free up funds for the Corporation to deliver on its core mandate as an upstream oil player,” ACEP made the recommendation in a detailed report that analysed the GNPC’s work programme for the 2019 financial year, which is currently awaiting parliamentary approval.

GNPC plans to spend $43.05 million on CSR but only $20.3 million on its operations in the Voltaian Basin and its subsidiaries in the sector.

“This is less than 50% of what GNPC wants to spend on CSR. In recent times, the Corporation has become more popular in delivering development projects rather than its core mandate.

“While GNPC, like any corporate entity, has a responsibility towards society, it is unusual for sound corporate organisations to spend more than 10% of its cash flow (not profit) on corporate social responsibility,” ACEP said.

ACEP stated that spending that much on corporate social responsibility gives a cause for concern particularly, when it is juxtaposed against GNPC’s “operations expenditure beyond the traditional cash call on the producing fields.”

“In 2019, GNPC proposes to spend $20.3 million on its operations in the Voltaian Basin and its subsidiaries in the sector. This is less than 50% of what GNPC wants to spend on CSR,” the energy policy think tank stated.

ACEP noted that GNPC in recent times has become more popular in delivering development projects rather than its core mandate.

ACEP in its analysis said the CSR budget of the Corporation represents 2819%, 270%, 240%, 629% of the capital budget of the Ministries of Justice and Attorney General, Energy, Agriculture and Finance respectively.

“In relation to the total budget of the mentioned ministries, GNPC’s CSR budget represents 210%, 254%, 47%, and 65% respectively,” ACEP added.

Turf war at GNPC

GNPC has been in the news in recent times over a seeming turf war between the Chief Executive, Dr. K.K Sarpong and Board Chair, Freddie Blay over the corporation’s procurement functions.

Dr. K. K. Sarpong has been accused of trying to assume the procurement function of the Corporation’s Chief Finance Officer.

But Board Chair of GNPC, Freddie Blay mounted Pressure on Dr. K. K Sarpong, to reverse the decision with immediate effect.

Nana Addo must call K.K. Sarpong, Blay to order – IES

A policy think tank, Institute for Energy Security had also called on President Nana Akufo-Addo to call the Board Chairman and Chief Executive of the Ghana National Petroleum Corporation (GNPC) to order.

The civil society body believes this friction undermines the smooth operations of the national oil company.

The IES Executive Director, Paa Kwasi Anamua-Sakyi who spoke to Citi News, said the troubles at GNPC could affect investment in Ghana and must be resolved as soon as possible.

“It is important that the President who has the power to appoint leading personnel in these functional areas should step in and stop this because it can deter investors and so it is important for the number one gentlemen of the land to make a statement on this and bring these two gentlemen to order,” he added.

The country’s inability to fully utilise the indigenous natural gas from the Sankofa fields has resulted in a monthly forfeiture of what the government says is some $28million to ENI.

This bottleneck, however, would be significantly resolved when Karpowership relocates its 470MW Powership to Takoradi within the second quarter of the year.

Currently stationed at the Tema Fishing Harbour, the 470MW Karadeniz Powership, Osman Khan, can take up to 50percent of the natural gas that ENI Ghana is contracted to produce, Managing Director of Karpowership Ghana Company Limited, Volkan Buyukbicer told the Bft.

The ‘take or pay’ Gas Sale Agreement the country has entered into with ENI and the other partners in the Sankofa project means that the country, being the off-taker, has to pay for some 140 million standard cubic feet per day of gas not only when it utilises it but also when it is unable to, through no fault of the supplier – ENI.

“The take or pay Gas purchase agreement would have cost us US$40 million per month if we failed to take the entire 140 mmscfd. However, we have been taking 60mmscfd in Takoradi for power generation, which has reduced the amount of gas un-utilised to 80mmscfd. Thus, about $28 million is being paid for gas currently not utilised,” the Energy Ministry explained in January, in response to reports that the country was losing US$40million monthly.

It has also been said that relocating the Powership to Takoradi would also save the country from paying millions of dollars as a result of the high transportation cost of WAPCo to convey natural gas from the western region to the Tema Power enclave.

The dual fuel Karpowership floating Powership has been operating on Heavy Fuel Oil so far, and according to Volkan Buyukbicer, its switch to the use of gas, which is much cheaper, would save the country more than $240million on an annual basis.

Besides, running the Powership on gas will result in additional savings to the power off-taker – ECG – and help drive down tariffs for consumers, he added.

The pressure on government to make ready infrastructure to fully evacuate the Sankofa gas is not lost on Karpowership, Mr Buyukbicer said, pledging that his company is fervently preparing their Project site at the Sekondi Naval Base for the transfer of the Powership there, even as government is doing its part towards gas delivery.

“We feel the pressure and we are working very fast to move the Powership there and to off-take the gas concurrently,” he said.

Karadeniz Powership Osman Khan is the largest floating Power Plant in the world and one of 19 Powerships built, owned and operated by the Karadeniz Holding, the parent company of Karpowership Ghana Company Limited.

Karpowership has a power purchase agreement with ECG to generate up to 450MW of electricity for ten years. But its long-term plan is to use Ghana as a “hub” to serve other countries in the West Africa sub-region.

Since it entered Ghana’s energy market in 2015, Karpowership has contributed between 23 and 25percent to power generation in the country, and according to Volkan Buyukbicer, the company sees Ghana “as a long-term partnership.”

In keeping with this long-term outlook, Mr Buyukbicer said the company believes in human capital development, which is why it has chosen to support, on a continuing basis, the education of basic school pupils in various parts of Tema with bursaries and teaching and learning aids.

The company, he added, is very mindful of the country’s localisation agenda and is leaving no stone unturned to fulfil its obligations in that regard.

As such, he said, out-sourcing jobs to local businesses and suppliers where the capacity is available is something that has been doing since its inception,

Asked to comment on the energy market and its capacity to deliver reliable and affordable any to Ghanaians, Mr Buyukbicer underscored the importance of long-term planning which is aligned to the overall industrial development agenda of the country.

The Ministry of Energy has given greenlight for fourteen (14) companies to submit their bids for the five oil blocks government has offered for competitive bidding.

The companies were selected after they satisfied the pre-qualification requirements

This was contained in a statement signed by the Head of Communications and Public Affairs at the Ministry of Energy, Nana Kofi Damoah.

The statement explained that out of the sixteen companies that put in application for the five oil blocks one presented a bid for an oil block meant for GNPC while the other one was disqualified for not meeting pre-qualification requirements.

“The fourteen companies that have been pre-qualified by the Committee for the next stage will be invited to submit their bids for the blocks for which they have been pre-qualified. Deadline for submission of bids will be on May 21, 2019 and the blocks are expected to be awarded to successful bidders in August 2019,” the statement said.

According to the Ministry, it will write directly to all companies who submitted documentation for expression of interest and pre-qualification to inform them of the outcome of the evaluation process.

“We wish to assure all stakeholders that the Ministry will deliver a transparent licensing round for the good people of Ghana,” it said.

Gas is relatively expensive and reducing the price will go a long way to stimulate growth not only among businesses but the country as a whole, the CEO of Tullow Oil, Kweku Andoh Awotwi, has suggested

There have been calls by energy experts for the reduction of gas prices, and Mr. Awotwi reckons those calls are germane.

“It is true that the terminal gas pricing in the country is quite high. I think PURC has a price of US$7-30 a million btu, and that translates to about US$40 a barrel of oil. When you look at other countries, for instance the US, gas price is less than US$3. People ask why it is so expensive, and among the reasons is that it’s tied to infrastructure that was built for the first time; but it is true that gas is relatively more expensive, and it may make a difference when prices are reduced.

“I think there is a challenge between reducing prices and recovering the cost of initial investment, but it could make a difference,” he told B&FT on the margins of the first investiture and induction ceremony of the Chartered Institute of Supply Chain Management (CISCM) Ghana, in Accra on Thursday.

Reports have already indicated that the tariff paid on gas supply for both domestic and industrial use may be going up from March this year, 2019.

This is the result of government’s decision to restrict gas supply from the Jubilee Field due to the coming onstream of gas from the ENI Field.

The restriction follows government’s agreement with ENI to consume the gas to be produced from the Sankofa Field.

The Sankofa Gas produced by ENI is expected to come onstream from March 2019 to produce associated gas for the Ghana Gas Company to power the Karpowership plant.

Ghana has made significant savings and met environmental benchmarks due to the gas sector.

However, it’s faced with structural non-payment issues due to inability to pay for gas supplied by exploration and production companies to the Ghana National Petroleum Company through the Ghana National Gas Company for use by the Volta River Authority and other Independent Power Producers.

Conduct research into innovation

At the CISCM event, he urged supply chain management practitioners to conduct research into integrated supply chains to facilitate policy initiatives of businesses and government.

According to Mr. Awotwi, research and case-studies in the energy, oil and gas sectors will be good starting points, given the vertical integration and upstream-downstream activities in related industries.

He explained: “With restructuring of the energy sector, there are many players in the generation of energy. There are also the distribution companies ECG/NEDCo as well as the National monopoly of the transmission sector.

“To this end, the oil and gas sectors will provide sufficient materials,” he told B&FT in an interview

For Mr. Awotwi, it is not by accident that most of the best-performing companies have established supply chain management systems in the form of business units, directorates, divisions or departments to optimise various interrelated supply chain functions – spanning planning, accounting, finance, sourcing/procurement among others – to add value and recognise the sovereignty of third parties and internal customers.

Leadership plays a crucial role in achieving this objective, he said, maintaining that companies need to establish leadership that initiates action and works with subordinates through effective communication to realize it.

Furthermore, he added, there has to be a leadership that motivates through economic and non-economic rewards to get the work done.

He also noted that the manner in which a company is able to put into practice benefits and minimize the challenges will facilitate the reaping of long-term rewards.

Supply chain business units when properly resourced can bring about cost-efficiency, increase in revenue, quality control and gaining competitive edge, Mr. Awotwi noted.

On his part, the president of CISCM Ghana, Richard Okrah, stated that in the short-term the institute is targeting the energy sector – where with the sector reform policy there are several players in the generation and distribution area.

“These players are providing goods and services to the consumer by involving the natural monopoly in the transmission of energy. We believe there are opportunities to improve service deliverables; and there are other areas such as the medical/pharmaceutical fields where there is a need to examine the supply chains to ensure quality health care and avoid flow of counterfeit drugs.”

The investiture ceremony also saw seven distinguished professionals been inducted as Fellows by CISCM – comprising Prof. Aba Bentil-Andam; Prof. Esther Sakyi-Dawson; Dr. Joseph Siaw-Agyapong; Dr. Theresa Oppong-Beeko; Kweku Andoh Awotwi;  Ing. Emmanuel T. Antwi Darkwa; and Joe Ghartey.