It said this was in order to prevent the VRA’s debts to GNGC from spiralling to unmanageable proportions and thus compromising the viability of the GNGC. PIAC made the recommendation in its 2016 semi-annual report, published on its website on Monday.

The VRA alone accounts for US$306.10 million; 89.9 percent, of the total indebtedness to the GNGC of US$340.49 million as at June 30, 2016. The GNGC, according to the report, was able to collect only US$17.17 million, representing 16 percent of its expected receivables of US$104.13 million for the period under review. The Committee also recommended that the GNGC fast-track the interconnection of its onshore pipeline to the West African Gas Pipeline to create a new market for its lean gas in the event of the VRA continuing to default in honouring its obligations.

PIAC, in the report, also urged government to consider resuming its hedging programme on crude oil export in order to mitigate the impact of the volatility of crude oil prices on the world market. Average price achieved for the Jubilee Crude Oil in the period was US$40.21 per barrel compared to the benchmark price of US$53.03; a negative variance of US$24.21, while the Jubilee International Oil Companies (IOCs) got higher values ranging between US$54.46 and $73.21 per barrel.

Among key findings contained in the report was  a reduction in crude oil production from the jubilee field from 1908 million barrels in mid-year 2015 to 11.44 million barrels in the same period in 2016; a 40 percent decline. The report attributed the cause of the decline to a combination of scheduled shutdown of the FPSO for routine maintenance and a faulty turret which led to suspension of production for up to 50 days.

Liftings by the Ghana Group amounted to 1.95 million barrels, representing 18.48 percent of total Liftings from the Jubilee Field between January and June 2016, a decline of 39 percent compared to that period in 2015. It also noted that conscious effort be made to ensure better targeting of the Annual Budget Funding Amount (ABFA) allocation to help maximise its impact.

“The selection of new priority areas to benefit from the ABFA for the next three years must be underpinned by detailed evaluation of the ABFA expenditures over the past six years,” it stated. Total revenues from the petroleum sector for the first half of 2016 amounted to US$126.41 million, a reduction of 55 per cent compared to 2015 and representing only 50.35 percent of projected half-year revenues.

“Approximately US$87.15 million of the total petroleum receipts was distributed during the period under review,” the report said, adding that the 52 percent of this amount was allocated to the ABFA. The Committee noted however that the figures contained in the report were those received from the authorities and not yet verified by PIAC.

“PIAC intends to undertake a physical monitoring, verification and value analysis of major projects, crude oil liftings, ABFA and GNPC spending for inclusion in the annual report.