*GNPC in a dilemma, says Prof Joe Tuffuor
Secretary to the Economic Management Team (EMT), Professor Joe Amoako Tuffuor, has said State-owned oil company, the Ghana National Petroleum Corporation (GNPC) is currently faced with a difficult choice of either switching into a renewable energy company or continuing to operate as a fossil fuel company.
According to Prof Tuffuor, the GNPC lacks the funds to continue oil exploration in the country should the oil majors eventually depart from Ghana such as in the case of ExxonMobil.
Also, should the GNPC decided to venture into renewable energy given the country’s introduction of renewable energy into its energy mix coupled with concerted global efforts for carbon emissions reduction and shift to renewable energy, it will not be able to produce enough energy to meet the country’s demand.
“With all the majors moving away from Ghana, our National Oil Company (GNPC) is faced with a challenge, which is that it doesn’t have the resources to continue with the exploration by itself. Because if it wants to continue to operate in fossil fuel then it has to go and borrow at a high cost on the capital market which is a disincentive to them,” stated Prof Tuffuor in a webinar held by the International Institute for Sustainable Development (IISD) and the Natural Resource Governance Institute (NRGI) and themed National Oil Companies roles in renewable energy and economic diversification.
“But our NOC (GNPC) must face the inevitable and turn to renewables which have lower operating costs and reinvent itself as a renewable national energy company. The only problem with that will be GNPC’s inability to generate enough energy to meet the country’s demand,” he added.
Speaking further at the webinar, Prof Tuffuor however, averred that the switch from fossil fuel to renewable energy in the country’s energy mix has seen some reluctance on the part of government despite the acknowledgment of the enormous benefits to be enjoyed, particularly by industry.
According to him, the current 12 ‘Take or Pay’ contracts with Independent Power Producers (IPPs) that mandate government to pay for power it does not use, is one of the big impediments to the switch to renewable energy.
He intimated that the high costs of the contracts to government is prohibiting government from switching to renewable energy despite the existence of legislation and government’s own desire to do so.
Adding that due to government’s commitments to settling the high costs of power generated by the IPPs, it is unable to incentivise and attract investments into the renewable energy as part of the country’s energy mix.