The country is estimated to have lost $37,129 from royalties the Saltpond Offshore Producing Co. Ltd (SOPCL) should have paid in the first half of 2015.
The amount represents three per cent of revenues accrued from the sale of 27,513 barrels of oil produced by the company on the Saltpond oil fields, located about 65 miles west of Accra.
According to the Public Interest and Accountability Committee (PIAC), information from the Ministry of Finance (MoF) indicated that no royalties were paid by SOPCL because the Ghana National Petroleum Corporation (GNPC) provided information that SOPCL had shut down its operations hence no inflows were to be expected.
“When PIAC drew MoF’s attention to the fact that SOPCL had actually reported production and sales for the period and that based on figures provided by SOPCL, a minimum of $37,129 ought to have been paid as royalties, the MoF responded that SOPCL made no payment in the Petroleum Holding Fund (PHF) because the company operated at a loss,” the 2015 Semi Annual report of PIAC said.
It also added that the Committee, which has oversight responsibility over the management of the country’s petroleum resources, did not find the MoF’s explanation tenable because in its view the payment of royalties had got nothing to do with cost of production and profitability of the company.
“Indeed royalties payable by SOPCL could range between $65,537 and $110,833 if outstanding balance of royalties brought forward is added to royalties chargeable during the period under review,” the report said.
The viability of the Saltpond oil field is contestable as present production and revenue figures show that the company can not meet its cost, and it is therefore not profitable in the long term.
In the first half of 2015, total production from the Saltpond field for the first half of year 2015 was 27,513 barrels compared to 37,443 barrels over the same period in 2014 representing approximately a 27 per cent decline in production.
Allocation of revenues
According to the report, a total of US$213 million of petroleum receipts was allocated during the period under review with 69 per cent of the amount (US$147.26 million) disbursed to the Annual Budget Funding Amount (ABFA) and remaining 31 per cent (US$66.33 million) going to GNPC.
This means that for the first time since the implementation of the PRMA began, no transfers were made to the Ghana Petroleum Funds.
It also said 55 per cent of the allocation to the ABFA was used to service loans contracted for oil and gas infrastructure, 21 per cent allocated to build capacity in selected sectors, especially education; 20 per cent for roads and other infrastructure and four per cent for interventions aimed at modernising agriculture.
“Only four per cent of the total ABFA went into the agriculture modernisation priority area,” it said.