For the second consecutive time, the Treasury Department has neglected to transfer over US$70 million in earnings from the Jubilee Oil Holding Limited (JOHL) lifting into the Petroleum Holding Fund (PHF) as required by legislation, according to the Public Interest and Accountability Committee (PIAC).
This raised the total amount of unremitted income in the PHF to over US$343 million by the end of 2023.
The situation is believed to breach the Petroleum Revenue Management Act (PRMA).
“This Act specifies that “any amount received by government, whether directly or indirectly, from petroleum resources not included in paragraphs (a) to (d) – including capital gains tax from the sale of exploration, development and production rights – should be considered part of the gross receipts of PHF,” disclosed PIAC’s Chair, Emerita Prof. Elizabeth Ardayfio-Schandorf .
She stated that JOHL, originally an offshore registered entity in the Cayman Islands, was purchased by GNPC through a US$164 million ‘share purchase agreement’ between Ghana and Anadarko WCTP Company in 2021.
The Chair of PIAC noted that crude oil production decreased for the fourth consecutive year.
According to her, production fell from a peak of 71.44 million barrels in 2019 to 48.25 million barrels in 2023 – an annual average decline of 9.2 percent.
Additionally, she mentioned that service rentals owed by international oil companies remained high at over US$2 million by the end of 2023, as stated in the Committee’s latest report.
Furthermore, she disclosed that “the retention of the current cap of US$100 million on the Ghana Stabilisation Fund (GSF) for the year 2023 did not adhere to the formula outlined in LI 2381”.
Emerita Prof. Elizabeth Ardayfio-Schandorf, speaking during a media engagement in Takoradi, observed that a correct application of the formula would have resulted in a cap of US$581 million.
She further noted that the current cap did not contribute to building a fund to fulfill its intended purpose.
She highlighted that development and production expenses, referring to the PIAC report, remain significantly high in the TEN field, while production was lower by more than 3 million barrels compared to Sankofa Gye Nyame, despite no drilling activity in either field.
In light of these issues, she mentioned that PIAC recommended in the 2023 report that the government and relevant regulatory bodies should take necessary steps to reverse production declines in existing oil fields and ensure investments in untapped fields.
Meanwhile, PIAC reiterated its stance that proceeds from liftings of JOHL and other GNPC subsidiaries constitute petroleum revenues as defined by PRMA provisions and should therefore be deposited into the PHF.
Additionally, the PIAC Chair urged the Ghana Revenue Authority (GRA) to intensify efforts to recover surface rental arrears, applying the usual default penalties.
While commending the Ministry of Finance for allocating 5 percent of the Annual Budget Funding Amount (ABFA) to the District Assembly Common Fund (DACF), the Committee encouraged the ministry to ensure that future disbursements to the DACF meet the minimum requirement of 5 percent of the ABFA.