Africa Centre for Energy Policy (ACEP), an energy think tank in the Republic of Ghana, has uncovered a deliberate plan by the CEO of Ghana National Petroleum Corporation and Board Chairman, which they believe could result in Ghana being short-changed.
Late last year, the West African nation’s national oil company, GNPC, acquired a seven per cent stake in the Jubilee and TEN oil fields at the cost of US$199 million from Kosmos Energy following the latter’s US$750 million acquisition of Occidental Petroleum (OXY) interest.
In an official communication announcing the acquisition, the company told Ghanaians that the interest acquired would be transferred to GNPC’s subsidiary, the GNPC Exploration and Production Company (GNPC Explorco).
“With this acquisition, GNPC Explorco will become part of the contractor group for the two blocks, together with Tullow, Petro SA and Kosmos (who also bought an additional interest in the two blocks),” the company said in the statement.
However, addressing a press conference in Accra, capital of Ghana, Policy Lead for Petroleum and Conventional Energy, Kodzo Yaotse disclosed that GNPC has set up an offshore company in Cayman Islands, in North America, to receive the seven per cent commercial interest in the blocks.
He said ACEP’s search discovered that a company called Jubilee Oil Holdings registered in Caymans Island with Dr KK Sarpong, CEO of GNPC and Mr Freddie Blay, board chairman of GNPC as directors have been assigned the seven per cent stake acquired from Kosmos Energy in the OXY transaction.
Mr Yaotse indicated that Jubilee Oil Holdings was registered on 21st September 2021.
He described this move as questionable.
He said Ghana stands the chance of losing tax revenue if this is not reversed.
“It is intriguing why GNPC has instead decided to create a subsidiary in a tax haven even if it needed a new subsidiary. Companies hide in tax havens for two popular reasons: secrecy and tax avoidance. Which of the two motivates GNPC?” he quizzed.
Touching on financing of the seven per cent stake, Yaotse described it as worrying that GNPC has not been able to communicate to Ghanaians how it intends to finance the acquisition.
Relying on a report by Africa Intelligence in October 2021, Yaotse said the report noted that the Ghana Revenue Authority (GRA), by extension the Finance Ministry, intends to lend the tax settlement amount from the Oxy transaction to GNPC to offset the acquisition cost of the seven per cent interest with no recourse to the Petroleum Revenue Management Act (PRMA), Act 815 as amended.
According to him, ACEP is in support of an acquisition of the seven per cent interest in the Jubilee and the TEN fields, however, “the right processes must be followed in respect of Ghanaian laws and proper corporate governance practices that project GNPC among its peers on accountability benchmarks.
“How the corporation has become broke from a strong cash position in the early years of oil production is a major subject for government attention…the corporation must find ways to fit into a philosophy that will advance the overall national interest rather than an attempt to evade the dictates of the Petroleum Revenue Management Act (PRMA) with convoluted schemes such as the new efforts to relocate asserts in Ghana to the Cayman Islands,” he added.
Proposing what the think tank believes is the solution to the controversy surrounding the transaction, Mr Yaotse urged the GNPC to seek parliamentary approval to ring-fence the seven per cent interest to guarantee a loan for a short period of 3-5 years to allow GNPC to use revenue from the acquired interest to amortise the loan.
He further recommended that the GNPC holds the interest locally, either directly or through Explore.
Energynewsafrica.com’s source within the corporation indicates that the company is preparing to respond to the claims by the think tank.