The cumulative indebtedness to the Ghana National Gas Company (GNGC) is almost a billion dollars according to the Public Interest and Accountability Committee’s (PIAC) half-year report for 2020.
PIAC has warned that the debt which is currently $942,260,510 has reached an unsustainable level.
The Committee noted that companies Ghana Gas provides gas to have failed to settle their debts hence the huge amount.
GNGC is the nation’s premier mid-stream gas business company that owns and operates infrastructure required for the gathering, transporting and marketing of natural gas resources in Ghana.
The Company has the responsibility to build, own and operate natural gas infrastructure required for gathering, processing, transportation and marketing of natural gas and natural gas liquids.
GNGC currently supplies gas to Volta River Authority (VRA) and other commercial institutions for power generation and industrial use.
“Cumulative indebtedness to Ghana Gas continued to increase, totalling an amount of US$942,260,510.63 at the end of the period [January to June 2020],” according to the PIAC report.
The report also noted that, Ghana Gas been unable to honour its financial obligations to the Ghana National Petroleum Commission due to the debt.
In 2019, the Ghana National Petroleum Commission delivered gas at an invoiced amount of US$86,733,078.02, but no payment has been made raising the total gas indebtedness to US$668,118,346.04.
“As at 30th June 2020, Ghana Gas Company’s cumulative indebtedness to GNPC amounted to US$393,042,132 as compared to US$263,949,220 during the same period in 2019,” the report noted.
“The debt is exorbitant due to VRA’s inability to meet its debt service obligation,” it explained further.
On the revenue side, the total indebtedness of Ghana Gas to GNPC stood at US$54.33 million compared to US$4.23 million for the same period in 2019.
Ghana Gas’ revenue realised from the sale of LPG and Condensates decreased by 31.13 percent and 48.45 percent respectively.
Also, out of the invoiced amount of US$93,547,640.50, only US$10,185,922.57 was paid Ghana Gas for the sale and transportation of lean gas.
The report noted that the COVID-19 pandemic and its associated effect on crude price on the world market affected revenue from Condensate.
In one of its recommendations, PIAC advised that Ghana Gas and GNPC should agree on a payment plan over the receipts from the Cash Waterfall Mechanism.
“This would ensure that GNPC receives payment for 116 raw gas supplied and makes appropriate lodgments into the PHF. Parliament should play a critical role in this arrangement,” PIAC said.
The Cash Waterfall Mechanism is part of a wider strategy to address the worsening energy sector debt and was approved for use by Cabinet in 2017.