The Public Interest and Accountability Committee (PIAC) has called for closer collaboration between the Ghana Revenue Authority (GRA) and the Petroleum Commission (PC) to ensure that oil exploration companies accurately pay surface rental due the state.
Citing wrongful lodgement of surface rentals and other revenues due the state from the companies, PIAC - which has oversight responsibility over the prudent management of oil revenues – believes that a closer collaboration between the two bodies will ensure that all loopholes are blocked.
In its 2017 half-year report on the management of oil revenues, the committee said: “The GRA and PC should collaborate more effectively to ensure that surface rentals due the state are accurately assessed and invoiced appropriately.”
It also recommended that to forestall wrongful lodgement of surface rentals and other receivables, the PC should ensure that oil companies are properly appraised on the requirements of the Petroleum Revenue Management Act (PRMA).
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PIAC, in its previous reports, called on the GRA to initiate processes to recover all outstanding surface rentals owed by the upstream companies to the government with applicable penalties.
Half-year surface rentals
For the first half of 2017, an amount of US$607,081.91 was paid into the Petroleum Holding Fund (PHF) in respect of surface rentals from seven companies. The assessed total surface rental from the operating companies for the full year 2017 is estimated at US$1.21 million.
Hess Gh Exploration Limited paid US$150,750.00, ENI Gh EP Ltd paid US$141,998.49 and Bluestar Exploration Gh paid US$78,230.00.
The rest are PetroGulf Limited – US$141,570.00, Tullow Ghana - US$59,261.22; Kosmos Energy – US$17,797.20 and Medea Development International Ltd/GOSCO – US$17,475.00.
Also during the period under review, a total amount of US$0.61 million was received in respect of surface rentals for block holdings. This includes arrears from 2016 and 2017 assessed surface rentals.
The report also explained that Springfield E&P’s 2016 surface rental arrears of US$30,884.25 were wrongfully paid into GRA’s account but it had not yet been transferred into the PHF as of June 30, 2017.
The GRA is mandated by law to assess, collect and account for petroleum revenue from all sources due the state.
According to the GRA, apart from three contractors who had issues to settle with the ownership of their blocks, all 14 out of 17 contractors had updated their payments, with only a few having some outstanding 2017 payments.
Rating the level of compliance in the payment of surface rent over the years, the GRA estimated compliance at 52.94 per cent in 2015 and 47.06 per cent in 2016. The compliance improved in 2017, rising to 82.35 per cent.
ACEP on surface rental
The Africa Centre for Energy Policy (ACEP) has said estimates by the Auditor General on outstanding surface rental payment to the government were lower than what ACEP’s analysis showed.
The Auditor General estimates that $1.5 million surface rental payments to the government were outstanding as of the end of 2016. Aside from Tullow Ghana Limited and Amni International Petroleum Development Company Limited who overpaid surface rental due the government, all other listed companies failed to do so.
ACEP estimates that the penalties for non-payment of surface rentals escalates the amount due the PHF to about $40 million as of end of year 2016 , yet companies continue to hold on to blocks in blatant disregard for the PRMA.