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Business News of Friday, 29 March 2019


$80m GNPC budget cut good – ACEP

Energy think tank, the African Centre for Energy Policy (ACEP), has welcomed the decision by parliament to reduce the budget of the Ghana National Petroleum Corporation (GNPC) by $80 million.

The Executive Director of ACEP, Mr Benjamin Boakye, however, said the organisation requires the details of the budget to ascertain whether or not the $80 million cut is significant.

“This is great but we need to see the details of the budget to see whether the amount reduced is significant or not. There was a lot of waste in the GNPC’s budget and that was why we raised issues with the budget they presented to parliament,” he told in an interview on Friday, 29 March 2019.

The Ranking Member of the Select Committee on Energy, Mr Adam Mutawakilu, revealed the budget cut to the media.

According to him, the GNPC failed to provide justification for some of the projects captured in its 2019 budget.

The Committee also raised questions about some $50 million the Corporation requested for the building of a refinery, as part of the government’s plans to create a petroleum hub in the country.

Recently, ACEP questioned moves by the GNPC to spend $43 million on Corporate Social Responsibility (CSR) and less on its operational functions.

ACEP alleged that GNPC was spending $20 million on its operations in the Voltaian Basin, which is less than 50% of the amount expected to be spent on CSR programmes.

A document by ACEP said: “The Corporation plans to spend US$ 43.05 million on corporate social responsibility for the 2019 operational year.”

“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.

“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. The Corporation’s CSR expenditure becomes more profound when its CSR budget is compared with the budget of some critical ministries.”

The policy think tank further called on parliament not to approve the budget.

“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 recommended.