GNPC directed to transfer JOHL shares to Explorco amidst transparency concerns
In a move that has caught the attention of both local and international stakeholders, the Ghana National Petroleum Corporation (GNPC) has been directed by Parliament to take immediate steps to transfer its shares in the offshore entity Jubilee Oil Holding Limited (JOHL) to its subsidiary, GNPC Explorco. The decision comes as mounting concerns have been raised regarding the transparency and accountability of JOHL’s operations, amidst its incorporation in the Cayman Islands, a well-known tax haven.
The saga stems from GNPC’s acquisition of a substantial stake in JOHL, a holding entity with a 7 percent commercial interest in the lucrative Jubilee and TEN oil fields, operated by Tullow Ghana. While initially applauded, the decision to domicile JOHL in a tax haven has cast a shadow over the corporation’s adherence to both domestic and international governance standards.
Critics, including the Public Interest and Accountability Committee (PIAC) and civil society groups dedicated to extractive sector oversight, anti-corruption measures, and good governance, have voiced their concerns vociferously. The central critique revolves around the perceived risk of revenue leakage and the undermining of transparency mechanisms established by the Petroleum Revenue Management Act (PRMA).
Intriguingly, JOHL’s financial performance has been noteworthy. The offshore entity boasted a staggering revenue of over $290 million in 2022 alone, according to the 2022 PIAC annual report. These substantial figures, however, have drawn skepticism, particularly in light of PIAC’s reservations about GNPC’s use of JOHL’s proceeds for ventures not aligned with its approved 2022 plan.
Key concerns also revolve around the origins of the financing involved. Notably, questions have arisen regarding the employment of specific tax revenues – notably capital gains tax – to extend loans to JOHL. This move, some argue, stands in direct violation of the PRMA, further adding to the overarching concerns about the transparency of the transaction.
The controversy has now extended beyond financial circles, as civil society organizations joined forces to voice their concerns. In an open letter addressed to President Nana Akufo-Addo, an alliance of groups dedicated to extractive sector governance, anti-corruption efforts, and good governance have called for presidential intervention, citing a lack of adequate response from the national oil company.
Parliament’s involvement marks a pivotal juncture in the unfolding narrative. The Committee on Mines and Energy, in its appraisal of GNPC’s 2023 work plan, has echoed the demands of civil society. It calls for the swift transfer of GNPC’s JOHL shares to its subsidiary, GNPC Explorco, a move seen as a significant step toward restoring confidence in the management of Ghana’s valuable oil resources.
As the controversy continues to reverberate, both domestic and international observers keenly await the next steps, and whether GNPC’s response will be commensurate with the urgency and depth of the concerns raised. The outcome of this situation could hold far-reaching implications not only for GNPC’s operations but also for Ghana’s reputation in managing its critical oil assets in a manner that aligns with global standards of transparency and governance.
