GRA needs legal backing to recover surface rentals
The government has been urged to provide legal backing for the Ghana Revenue Authority (GRA) to be able to sanction licensed oil companies that default in the payment of surface rental.
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The legal backing has become necessary following the consistent default of some companies to pay the surface rental owed the government in successive years.
The 2016 annual report of the Public Interest and Accountability Committee (PIAC) -the committee with oversight responsibility over the prudent management of petroleum revenues – said only five out of the 18 license holders paid surface rental during the period under review.
According to the report, these companies - ENI Ghana Exploration and Production Limited (Ltd) Saltpond Field (SOPCL), Cola Natural Resource and Medea, AGM/ GNPC Explorco, Comac Energy GH Ltd, Amni Ghana, Sahara Energy Fields Ghana, A-Z Petroleum Production Ltd, Britannia-U, UB Resources, Swiss Africa Oil Company Ltd, SpringField Exploration and Heritage/ Blue Star were listed as the remaining companies that owed surface rental.
It ,therefore, recommended that the GRA must ensure that all outstanding annual surface rentals owed by licensed companies operating at Ghana’s oil production blocs were paid with interest.
A member of the committee, Dr Steve Manteaw ,however, explained that GRA had been unable to carry out the mandate of effectively recovering owed surface rentals because it did not have legal backing.
As a result, all it could do was to pursue and encourage payment of the surface rental without applying any sanctions.
He told members of the Institute of Financial and Economic Journalists (IFEJ) at a post analysis workshop on the 2016 PIAC report in Koforidua that “ the GRA has explained that they are unable to apply sanctions to the companies that default in the payment of surface rental because there is no legal backing for undertaking that activity.”
Who would collect the rent?
Dr Manteaw explained that very soon, crude oil was going to be exploited on land in the Voltain basin and when that happened, there could be a conflict as to the institution that would take the revenue.
He added that because the Office of the Administrator of Stool Lands (OASL) collected revenue for land purposes and the GRA took rents for surface, especially oil revenues, there would be a banter as to who to take the revenue.
He said surface rental in the oil sector was the equivalent of ground rent in the mining sector and ,therefore, are in the same fee category.
In addition, he said there was no law stipulated for the appropriate institution to collect the revenue.
“Normally, ground revenues are disbursed to stool land owners by the OASL as stated in the Constitution but the assumption with surface rental is that because its offshore and there is no chief that has jurisdiction over the sea, the government has taken charge over that rent which is collected by GRA,” he explained.
After clearly stating the differences between the two, he defined ground rent as monies being paid annually by license holders for access to exploiting the resources on a leased land in mining. This also applied to the oil sector with respect to off shore activities and was termed surface rental.
He said in the mining sector, this particular fee is collected by the OASL and not by the GRA as in the oil sector.
High rent
He stated that prior to oil production, the level of rent were at a certain specified price and as a result of the oil production, many people have moved in the community and are eager to benefit from the oil revenue and that has put pressure on the existing pricing stool, raising rents to a higher level due to increasing compensations.
To buttress his point, he stated that section 24 of the Petroleum Revenue Management Act (PRMA) says any community or group of people that will be adversely affected by the petroleum activities shall be compensated from the petroleum revenues.
He explained that if the host of the petroleum activities thought that there have been negatively affected, they would have to collect compensation.
“Compensations may not necessarily be in cash but may come in extra budgetary allocation for the construction of the affordable housing scheme,” he said. — GB