Parliament has directed the Ghana National Petroleum Corporation (GNPC) to take immediate steps to transfer its shares in the offshore company Jubilee Oil Holding Limited (JOHL) to its subsidiary company GNPC Explorco.
This development follows mounting concerns raised by several key stakeholders, including the Public Interest and Accountability Committee (PIAC) as well as civil society groups working on extractives, anti-corruption, and good governance on JOHL’s operations.
JOHL, the offshore registered company in the Cayman Islands, was acquired by GNPC through over US$164million ‘share purchase agreement’ between Ghana and Anadarko WCTP Company in 2021, when the latter announced plans to offload its interests.
The company holds 7 percent commercial interest in Jubilee and TEN oil fields operated by Tullow Ghana.
Although the acquisition of the stake was well-received, the decision to incorporate JOHL in Cayman Islands – tax haven – complicates the nation’s interest in the oil fields, injects risks of revenue leakages, and blights the transparency and accountability mechanisms established in the Petroleum Revenue Management Act (PRMA), according to many industry watchers and corruption fighters.
It made its first oil lifting of 944,164 barrels of oil in the Jubilee Field in the first half of 2022, realising over US$100million.
In 2022 alone, JOHL’s stake raked in some US$290million, according to the 2022 PIAC annual report. Total payments for cash calls (including fields in which Explorco holds an interest) amounted to US$83million – leaving a gross margin of US$207million for GNPC/JOHL from the Jubilee and TEN fields.
However, PIAC, a public watchdog over the use and management of oil revenues, has in the past expressed worry over how GNPC used JOHL to carry out operations not approved in its plan for 2022.
Two notable examples are Explorco cash calls on Springfield, ENI Block 4, among others at US$5,546,419.12 and the decommissioning of the Saltpond oil rig – US$11,000,000.
This also includes the continued use of lifting proceeds of JOHL by GNPC for other expenditures, despite PIAC’s position that revenues of JOHL constitute petroleum revenue and should be paid into the Petroleum Holding Fund (PHF).
In defiance, the GNPC maintains that the company is registered under the Companies Act and obviously, the terms and conditions, as well as the constitution of JOHL, are governed by that Act, not the PRMA.
For that reason, GNPC said 100 percent of that revenue cannot be paid into the Petroleum Holding Fund. “Jubilee Oil Holding Limited must operate and if at the end of the day, it declares profit and the directors decide dividends must be paid, that money is paid to the GNPC for it to pay into the Petroleum Holding Fund,” the Deputy Chief Executive of GNPC in charge of Commerce, Strategy and Business Development, Mr. Joseph Dadzie, said when he appeared before Parliament.
Meanwhile, the Alliance of CSOs working on extractives, anti-corruption and good governance, in an ‘Open Letter to President Nana Akufo-Addo, said: “We struggle to find any justifiable reason that makes Jubilee Oil Holding a better holder of the 7 percent interest than GNPC or its local subsidiary”.
“We also note that the specific tax revenue used to grant the loan to JOHL was petroleum revenues (capital gains tax), which is in complete violation of the Petroleum Revenue Management Act (PRMA), Act 815 as amended,” portions of the letter read.
Moreover, they questioned why GNPC subsequently initiated steps to sell 50 percent of JOHL – the national asset held in the Cayman Islands – to PetroSA under suspicious circumstances two years after Anadarko sold the asset to GNPC.
In view of these developments, they called on the President to intervene, following the failure of the national oil company to respond to these public concerns.
In line with the demands of the CSOs, the Committee on Mines and Energy of Parliament in its report approving GNPC’s 2023 work plan, called on the national oil company to expedite processes to transfer its shares in JOHL to Explorco.