Upstream Oil Firms Owe Gov’t $2.1million For Surface Rentals
The non-payment of US$2.1 million surface rentals by some upstream companies last year, denied the Petroleum Holding Fund (PHF) revenues for development projects.
Surface rentals are fees payable to the government every year for a quarrying permit holder or a lessee for the right to exploit mineral resources.
The Public Interest and Accountability Committee (PIAC) made this observation in its 2020 Annual Report.
According to the report, the US$2.1 million arrears for 2020 represent a 34.71% increment over the 2019 arrears of US$1.57 million.
On the other hand, the state was found to be owing Amni Ghana $518, Heritage (GOSCO) $106,521.86, and Springfield and Exploration Limited, which operated at West Cape Three Points Block 2, $16,863.4. All of these firms paid their surface rentals in excess.
Companies owing surface rentals include Medea Development, which operated at East Cape Three Points, $156,540; Heritage (GOSCO) at East Keta, $532,366.67, and Sahara Energy Fields Ghana at Shallow Water Cape Three Points, $71,934.93.
Others include Britania-U, which operated at South-West Saltpond, owing $657,708.33 and UB Resources Ghana Limited at Offshore Cape Three Points South also with $67,666.58 in debts.
The rest are Swiss Africa Oil Company Limited, which operated at the Onshore/Offshore Keta Delta Block, $712,500.00 and Exxon Mobil at $30.00. The latter recently announced that it will be exiting the Ghanaian oil and gas market.
Compared to the previous report, the Committee also detected that the surface rental payments received in 2020 recorded a reduction.
The total surface rental payments for 2020 was, US$697,532.14 compared with US$1,109,537.98 for 2019, indicating a 37% decline, the report had it.
It was noted in the report that, “This stream contributes relatively low amounts to total revenue.”
Amidst the findings, the Committee has charged the Ghana Revenue Authority (GRA), to, immediately take action to recover the arrears with the appropriate interest as recommended by the Petroleum Revenue Management Act.
Meanwhile, the Chairman of the Legal Sub-Committee of PIAC, Dr Nasir Alfa Mohammed has indicated that some companies were not willing to pay the surface rentals.
He explained that, those companies felt that the sanctions on the non-payment of surface rentals were not punitive. He revealed this over the weekend when PIAC took journalists through its 2020 Annual Report at a workshop at Tutu in the Eastern Region.
Dr Mohammed has since called for a national dialogue to streamline legislation that would have punitive measures and strengthen PIAC to have a strong tooth to bite.
The Chairman of Public Affairs and Communications Sub-Committee of PIAC, Eric Kyeman Defor also disclosed that one of the companies operating in the oil and gas sector some few years ago left the country without paying surface rentals.
He added that GRA made efforts to retrieve the debt but had to abandon the issue because it cost more to chase the debts than the debts put together.
Mr Defor bemoaned such a situation and called for tightened mechanisms to curtail such occurrence.
About the PIAC Annual Report
The 2020 PIAC Annual Report is in fulfilment of PIAC’s statutory obligation under the Petroleum Revenue Management Act, 2011 (Act 815).
The Act, as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), enjoins PIAC to publish an Annual Report.
PIAC, CSOs bemoan non-utilisation of US$6.5bn from oil in 10 years
Doing a retrospection of 10 years into the country’s oil production and the utilisation of revenues, PIAC and Civil Society Organisations (CSOs) say, there is a lack of tangible projects to point to, for the over US$6.5billion revenue.
In the view of PIAC, Africa Centre for Energy Policy (ACEP) and Institute for Energy Security (IES), successive governments have failed to align spending oil funds with the long-term aspirations of the country.
The Coordinator of PIAC, Isaac Dwamena argues that for the past 10 years, governments have selected different priority areas in terms of allocation of the revenue, making it difficult to measure its impact.
He, therefore, called for a national development plan to guide the usage of oil funds within specified periods.
The Executive Director of IES, Nana Amoasi VII, said that “government after government have decided to utilise oil revenues in line with political party manifestos rather than a national agenda.”
Therefore, “There is nothing commemorative about our spending of petroleum revenues that the state has received since oil production commenced on a commercial scale,” he said.
To the Executive Director of ACEP, Benjamin Boakye the failure to achieve sustained economic development 10 years into oil production is because of weak governance structures and lack of accountability.