The Civil Society Platform on Oil and Gas (CSPOG) has warned that any move to collateralise gas revenues is inconsistent with the Petroleum Revenue Management Act of 2011, Act 815.
According to the group, the intended action of government to use revenues from lean gas produced by Ghana National Gas Company (NGNC) from the Atuabo processing plant to collateralise $2billion Chinese China Development Bank (CDB) loan amounts to a potential violation of the Petroleum Revenue Management.
The CDB disbursed $1billion of the $3billion loan and government placed a CAP on US$1.5billion.
The disbursement was to finance the Atuabo Gas Plant, pipelines from the Jubilee fields and other infrastructure.
When the crude oil prices fell, that source of financing the loan became inadequate and that is why disbursement of the entire US$3billion loan was stalled.
A statement signed by Dr Steve Manteaw, Chairman of CSPOG, was in reaction to a leaked cabinet memo which reveals the intentions of government.
Opposition New Patriotic Party (NPP) disclosed the intentions of government contained in the cabinet memo at a press conference.
Initially, it was denied by Deputy Minister of Power John Jinapor but acting Power Minister in a subsequent interview confirmed the existence of such a memo.
Dr Manteaw Section 2 of the Petroleum Revenue Management Act of 2011, Act 815, which establishes the Ghana Petroleum Funds and it required all revenues realised from petroleum activities to be deposited into the Ghana Petroleum Holding Fund and to be managed by the Bank of Ghana (BoG).
He warned that “we don’t have the liberty to do otherwise”.
He explained that transfers from the Fund, for the purposes of whatever expenditure, are supposed to be in accordance with the Act.
Dr Manteaw said section 5 of the Act, which deals with prohibited uses of the Petroleum Holding Fund, proceeds to categorically provide under clause (1) that, “the amount in the Petroleum Holding Fund earmarked for transfer into the Ghana Petroleum Funds, shall not be used to provide credit to the government, public enterprises, private sector entities or any other person or entity.
In addition, it cannot be used as collateral for debts, guarantees, commitments or other liabilities of any other entity.
Dr Manteaw added that clause (2) further provides that: “in order to preserve revenue streams from petroleum and ensure the object of this Act, there shall not be any borrowing against the Petroleum Holding Fund”.
He explained that what this means is that, it does not matter whether it is the resource itself or the revenues derived from it, the law prohibits any form of its encumbrance.
“While we are happy to grant the government the benefit of doubt, and to assume that they are acting, oblivious of the referenced legal provisions, we will not hesitate to seek judicial intervention in the public’s interest, if regardless of this caution, it continues to do what we are being told it has initiated” he said.
$13 billion deal with China in 2010
In 2010, Ghana signed nearly $13 billion worth of loan deals with Chinese investors to fund energy, agriculture and transport development.
The deals were signed during a visit by President John Atta Mills to Beijing.
The new loans include $3 billion from the Chinese Development Bank to finance oil and gas infrastructure and agricultural development.
A second loan deal for $9.87 billion was signed with Chinese Exim Bank for road, railway and dam work, he said.
Terkper confirms deal
Mr. Terkper confirmed that Ghana intends to offer gas from one of the country’s gas fields to China for a loan from CDB for a period of 19 years starting in 2018.
Mr. Terkper also explained that this agreement was in line with government’s self-financing loan strategy following the negotiations with the CNB by a task force mandated to discuss the utilization of the $500 million remaining $1.5 billion of the $3 billion deal.
“The premise for the CDB facility, which is in tune with our self-financing loan strategy is that proceeds from any commercial project must be used to pay for any loans that are used to finance the project,” he said
“The payment was to be from revenue flows from crude oil which is sold on the international market at bench mark prices but crude oil prices fell and that source of financing the loan became inadequate,” Mr. Terkper noted in unison with the NPP’s narration.
He also explained that the strategy of self-financing loans was to avoid putting any burden tax payers.
“So we had indicated that once the processes start, there could be other source of financing repayment for the facility. That is the discussion that we are holding now, to see how we can use the proceeds from lean gas and from other gas sources to finance any infrastructure that is built and not put the load for such infrastructure on the tax payer and increase public debt.”
The Finder