Ghana’s national oil company, GNPC, is seeking parliamentary approval to acquire a loan facility to the tune of $620 million to refinance existing Litasco SA loan facilities and Bank Guarantees.
This is contained in GNPC’s 2023 work plan which was submitted to Parliament and referred to Parliamentary Select Committee on Mines and Energy for deliberation.
Officials of GNPC, who appeared before the Parliamentary Select Committee, according to the Committee’s report sighted by energynewsafrica.com, indicated that GNPC is seeking the loan acquisition as a result of the withdrawal of the lead bank of LITASCO SA and issuer.
In another document by Lukoil which provides details of the terms of the LITASCO SA loan, it is revealed that part of the loan will also be used to settle the debt owed by the Government of Ghana (GOG) to Karpowership Ghana Limited and also extend their contract.
According to the document, US$155 million would be used to refinance LITASCO’s debt, US$150 million would be used to settle the debt owed by the Government of Ghana (GOG) to Karpower while US$126.50 million to renew the Karpower bank guarantees.
Interestingly, this has received criticism from the Minority in Parliament with Ranking Member on the Mines and Energy Committee, Hon. John Abdulai Jinapor accusing President Akufo-Addo of a purported directive to GNPC to secure the loan without parliamentary approval to borrow $431.5 million from Lukoil International Trading and Supply Company (LITASCO SA).
According to him, the purported directive by the President is an attempt to violate the laws of Ghana.
He recalled that before Parliament went on recess, the Committee on Mines and Energy directed GNPC to submit the full terms of the loan agreement for consideration and approval in line with Article 181 of the 1992 Constitution.
He claimed President Akufo-Addo unfortunately directed GNPC to avoid Parliamentary scrutiny of the agreement.
He said by this action, the President is effectively committing Ghana to yet another loan but this time, using oil from the TEN fields as collateral for over five years.
“This loan is being contracted at an interest rate of SOFR 1 Month+ Margin, and a structured fee of 2.5% flat rate.
“Also worth noting is the fact that this shady arrangement is being routed through the tainted and controversial SPV called Jubilee Oil Holdings Limited (JOHL), from which the government intends to rely as a source of repayment instead of relying on proceeds from the Government of Ghana,” he said.
Apart from the clear breach of the laws of Ghana regarding approval of such loan agreements, Jinapor said the whole arrangement would further hinder GNPC’s ability to obtain the needed funds to focus on its core mandate such as continuing the reconnaissance works on the Voltain Basin Project and fulfilling its cash call obligations.
The other challenge is that this agreement affects all participating interests held directly or indirectly by the Government of Ghana (GOG), including royalty entitlements.
The arrangement requires GOG to substitute cargoes from other interests held by Ghana should production volumes from the TEN fields prove insufficient to meet the minimum quantity.
“This is a worrying development that Ghanaians must rise and speak against. The country belongs to all of us and the laws of this country must be respected by all including the President,” he concluded.
However, in a swift rebuttal, the Ministry of Energy, in a statement on Friday, September 22, 2023, said the move by the Minority is only a calculated attempt to sully the reputation of the government including the President and other government officials for political reasons.
The Ministry indicated that the said agreement has now gone through various processes and is yet to be sent to Parliament when the House reconvenes in mid-October.
“It is important to state that this particular facility the Minority mischievously alludes to is being re-financed for the sixth time. In the 2023 Work Programme of the GNPC, the Corporation indicated clearly their intentions to raise $620 million from the LITASCO facility to finance their work programme and proceeded to obtain the necessary parliamentary approval, including the refinancing of the loan. Now, GNPC settled on the terms and conditions of this facility with LITASCO just last week Thursday, September 14, 2023, duly obtaining its Board’s approval.
“The record will show that on the same day, the document was sent to the Ministry of Energy for a ‘no objection’. After the Ministry of Energy expressed its objection, it then forwarded the document to the Ministry of Finance for its ‘no objection’ and approval, in line with the dictates of the Public Financial Management Act (PFMA). MOF’s approval was given on Friday, September 15, 2023.”
The Ministry bemoaned why the ranking Member and the Minority group, given their expected knowledge of these procedural requirements, would allege wrongdoing on the part of government actors.
“The only possible reason one can latch unto for the Minority’s action is to cause disaffection for the government for possible electoral gains, given the proximity to the electioneering campaign season,” it said.
The Ministry said the general public should ignore and treat with contempt the claims by the Minority, describing them as inaccurate.