PIAC demands whereabouts of US$100m oil proceeds
The Public Interest and Accountability Committee (PIAC) is demanding answers on why US$100.7million was not paid into the Petroleum Holding Funds as required by law.
The amount relates to 944,164bbls of crude liftings made by JOHL, a subsidiary of Ghana National Petroleum Corporation (GNPC) that holds 7 percent interest in the Jubilee and TEN Fields on behalf of the state. The stake was acquired in 2021 from Anadarko.
PIAC, a state watchdog over management and utilisation of petroleum revenue, however said the crude lifting proceeds – the first by JOHL – were not paid into the PHF, contrary to the Petroleum Revenue Management Act (PRMA).
“Following the acquisition of 7 percent interest in the Jubilee and TEN Fields by GNPC in 2021 (later ceded to its subsidiary, JOHL), JOHL made its first lifting (944,164bbls) on the Jubilee Field in H1 2022, amounting to US$100,748,908. This amount was not paid into the PHF.
Contrary to Section 6 (e) of the Petroleum Revenue Management Act, 2011 (Act 815), Capital Gains Tax was not assessed and collected by the Ghana Revenue Authority in the sale of 7 percent interest by Anadarko in the Jubilee and TEN Fields in 2021,” it said in its semi-annual report for 2022.
Ministry of Finance, GRA fail to provide answers
In its bid to find answers, PIAC said it wrote to the Ghana Revenue Authority (GRA) in accordance with the PRMA; but the GRA referred it to Ministry of Finance, indicating that the ministry was exclusively in charge of the transaction.
However, when PIAC wrote to the ministry, it also in turn referred the Committee to the Ghana Revenue Authority for answers.
PIAC – which is without prosecutorial powers – insisted that the proceeds of liftings by JOHL must be paid into PHF, as the Committee is convinced those proceeds form part of Ghana’s petroleum revenues.
It also advised GRA to intensify its efforts at collecting surface rental arrears in addition to any new assessment before end of the year.
“To enable GRA assess and collect revenues from IOCs before they exit Ghana, the Minister for Energy is encouraged to inform GRA and other relevant institutions before the termination of contracts,” it added.
A smokescreen
Commenting on the matter, Benjamin Boakye of Africa Centre for Energy Policy (ACEP), an energy think-tank, said government’s posture from the onset was to use a scheme to conceal details of the transaction.
“I think we foresaw the intentions of government and GNPC. They deliberately wanted to hide those assets in the Cayman Islands – a taxhaven – and micromanage the revenue through political channels.”
Mr. Boakye, who has been critical of the transaction, added that as the country begins negotiations with the International Monetary Fund (IMF) on a US$3billion bailout programme, it will be important for the IMF to pay attention to some of the schemes for diverting state funds from the budget.
“GNPC aligns its losses to the budget, but useful assets like the 7 percent interest in Jubilee and TEN are hidden away from accountability structures in the petroleum sector.
“GNPC seeks to collateralise the inflow of the revenues from JOHL to raise money for questionable exploration programmes. This certainly diverts critical revenue needed for economic recovery into a gambling expedition,” he lamented.
Other findings and recommendations
The report also established that GH₵202million of the Annual Budget Funding Amount (ABFA) was unutilised at the end of 2021, representing 9.8 percent of 2021 utilisation.
It further found that no transfer of ABFA was made into the District Assemblies Common Fund during the first half of 2022, even though an amount of GH₵157.77million was budgeted for 2022.
On recommendations, the Committee advised that the investment of petroleum funds should not be limited to the US market but other markets should be considered, albeit under advice of the Investment Advisory Committee (IAC).
It also urged the Minister for Finance, in determining the cap on the Ghana Stabilisation Fund, to comply with the relevant provisions of L.I 2381; and said that parliament should take a keen interest in GNPC’s budget and ensure the Corporation’s budget is based on realistic estimates of expected revenue.
“The Committee reiterates its call to the MoF to take advantage of the PRMA review to provide clear rules for the treatment of unutilised ABFA. The Ministry of Finance should ensure that transfers to the DACF are done quarterly in order for District Assemblies to efficiently carry out their functions,” the report said.
It further charged the Ghana Revenue Authority and Ministry of Finance to collaborate to ensure that Capital Gains Tax and other taxes arising from transactions in the sector are assessed and paid to the PHF.