Finance Ministry fails to make $70m JOHL proceeds deposit in PHF; accumulated unpaid revenues to PHF hit $343m
The Ministry of Finance has come under scrutiny for failing, for the second consecutive time, to deposit over $70 million in proceeds from Jubilee Oil Holding Limited (JOHL) into the Petroleum Holding Fund (PHF) as mandated by law.
This lapse, according to the Public Interest and Accountability Committee (PIAC), has swelled the accumulated unpaid revenues in the PHF to over $343 million by the close of 2023, potentially breaching the Petroleum Revenue Management Act (PRMA).
The PRMA stipulates that all government receipts from petroleum resources, including capital gains tax from the sale of exploration, development, and production rights, should be accounted for in the PHF.
Emerita Prof. Elizabeth Ardayfio-Schandorf, PIAC’s Chair, noted that JOHL, initially registered offshore in the Cayman Islands, was acquired by the Ghana National Petroleum Corporation (GNPC) for over $164 million through a share purchase agreement with Anadarko WCTP Company in 2021.
Prof. Ardayfio-Schandorf highlighted a worrying trend of declining crude oil production, which has fallen from a peak of 71.44 million barrels in 2019 to 48.25 million barrels in 2023, reflecting an annual average decline of 9.2 percent.
She also pointed out the high development and production costs in the TEN field, where production has lagged by more than 3 million barrels compared to the Sankofa Gye Nyame field, despite the absence of drilling in both fields.
In response to these developments, PIAC has recommended that the government and relevant regulatory bodies implement measures to reverse the production decline in existing oil fields and encourage investment in untapped fields.
Moreover, the PIAC Chair criticized the retention of the current $100 million cap on the Ghana Stabilisation Fund (GSF) for 2023, asserting that it did not conform to the formula prescribed in Legislative Instrument 2381. Proper application of this formula would have set the cap at $581 million, thus ensuring the fund’s capacity to fulfill its stabilisation mandate.
PIAC reaffirmed its position that proceeds from JOHL and other GNPC subsidiaries should be considered petroleum revenues under the PRMA and thus deposited into the PHF. Additionally, PIAC urged the Ghana Revenue Authority (GRA) to enhance efforts to recover outstanding surface rental arrears worth $2m, applying default penalties where applicable.
While PIAC acknowledged the Ministry of Finance’s effort in disbursing 5 percent of the Annual Budget Funding Amount (ABFA) to the District Assembly Common Fund (DACF), it stressed the importance of ensuring future disbursements consistently meet the minimum requirement of 5 percent of the ABFA.
