By: Kenneth Appiah Bani.
The Ghana National Gas Company Limited (GNGLC) is grappling with a growing debt crisis, largely driven by the Volta River Authority’s (VRA) inability to meet its payment obligations.
As of June 30, 2024, GNGLC’s debt to the Ghana National Petroleum Corporation (GNPC) had exceeded $626 million, a sharp increase from $559 million in the same period in 2023. This marks a worrying 12.1% rise in debt, significantly higher than the 7.4% growth recorded in the first half of 2023.
A report by the Public Interest Accountability Committee (PIAC) for the first half of 2024 attributes this surge to VRA’s persistent financial difficulties, which have impaired its capacity to pay for gas supplied by GNGLC.
The volume of raw gas supplied to GNGLC by GNPC also saw a slight dip, dropping to 22,158,283.5 MMBtu in the first half of 2024 compared to 22,730,386.70 MMBtu during the same period in 2023. The invoiced value of gas supplied in the first half of 2024 stood at $144 million. However, GNGLC only received a credit note of $121 million, leaving an outstanding $22 million for the period. When added to the opening debt balance of $604 million, this brings GNGLC’s total debt to $626 million.
The PIAC report highlights the serious ramifications of this mounting debt for both GNGLC and VRA’s operational sustainability. The report also raises concerns about potential breaches of the Petroleum Holding Fund (PHF) framework, as revenues from natural gas sales constitute a key source of income for the fund.
Additionally, payments made to GNGLC through the Cash Waterfall Mechanism (CWM) have fallen short. By June 2024, cumulative payments through the CWM totaled $10 million, covering invoices from November 2023 to April 2024. This figure is significantly lower than the $18.2 million received during the same period in 2023, worsening GNGLC’s financial challenges.
PIAC has called for urgent action from stakeholders to address these issues and secure the long-term financial stability of Ghana’s energy sector. Resolving VRA’s financial challenges and enhancing the efficiency of the CWM are deemed critical steps to mitigate GNGLC’s debt crisis and prevent further escalation.
The report underscores the pressing need for coordinated efforts to ensure the viability of these key players in the country’s energy industry.
