The Centre for Natural Resources and Environmental Management (CNREM) has called on the Minister-designate for National Security, Mr Albert Kan-Dapaah, to, as a matter of national interest and urgency, investigate Ghana’s Petroleum Exploration and Production Law Act 919 that produced the Hybrid system of sharing petroleum revenue, which is inimical to the country’s long term interests.
In a letter to the minister-designatelate last year andcopied to the Chairman, Council Of State, Dr. Charles Mensa, Executive Director of Institute of Economic Affairs, Chief of Defence Staff, Inspector General of Police, CNREM, pointed out that, the Hybrid System which Ghana has operated with in the past nine years of oil production has been described by energy law professors from Harvard and Texas Universities, others from South Africa and Tanzania including Ghana’s own Professor Raymond Atuguba, as ‘garbage’ at the Ghana International Oil Conference at La Beach Hotel on January 12, 2017, the letter reminded The Minister-designate.
The letter titled ‘Nine years of oil production in Ghana’ and signed by the Executive Director, Mr Solomon Kwawukume on behalf of the Fair Trade Oil Share – Ghana PSA (FTOS-Ghana PSA) Campaign team now operating under the auspices of CNREM, pointed out that ‘… the Royalty Tax/Hybrid System is not the best option for Ghana…’ and therefore called for its immediate abrogation.
Accompanied by an independent and detailed report on the nine years of oil production, the letter explained that the ‘exploitation of the oil and gas which are finite resources, if not properly handled and managed, could lead a country to ‘death’ or enhance the socio-economic life and well-being of citizens if properly managed and handled with the right policies.
‘In our bird’s eye view and holistic assessment, we are looking ‘death’ in the face as a nation in our upstream oil industry because we have lost on the fiscal regime to start with’.
‘No progressive and right thinking leaders of 21st century nations would adopt the royalty tax/ hybrid system to govern the exploitation of their nation’s oil and gas resources because the exploitation of oil and gas, if not properly handled, poses serious insecurity threats and instability to a nation,’ the document pointed out.
Going into the memory lane, CNREM’ letter pointed out that at various fora held across the country before production started on December 15, 2010, Dr. Amoako Tufuor, Economic Adviser to the President, announced that Ghana would be earning 42.20% of the total production revenue from the Jubilee Field which translates into US$5billion in the first Five (5)years. Interestingly, after nine (9) years of production Ghana is yet to earn the US$5bn in five years as promised by Dr. Tufuor.
Going into specifics CNREM said ‘Our research revealed Ghana earned US$4.488bn from the three major revenue sources – royalties, carried and participating interests and corporate taxes – representing 20.07% of total revenue generated …This is a shortfall of 22.13% below the 42.20% Ghanaians were made to believe at the workshop by the Economic Adviser.
Going by Dr. Tufour’s declaration on March, 21 2010, Ghana should have earned a cumulative total of US$9.437bn from the Jubilee Field as at December 31, 2019 from the cumulative total revenue of US$22.262bn generated leaving US$12.925bn to the foreign Oil companies.
Continuing, CNREM said ‘if you subtracted the approved capital development cost of US$4.565b and the budgeted operating expenses for 23 years of US3.435b from it, the foreign oil companies are left with US$4.925b as their surplus.
‘The shortfall of US$4,949 (US$9.437 – US$4,488b) revenue due Ghana has come about due to deliberate inflated project cost by almost US$4.00 billion to evade taxes …’
Speaking to the Minister directly, CNREM called on him to ‘find answers to this bizarre situation and that duty and responsibility lies heavily on him too as the Minister for National Security because of the insecurity and instability threats the mismanagement of the upstream oil industry poses to a nation in the long run.
‘Ghana would not be in the current financial crisis and mess if at least the US$9.437b due Ghana under the bad hybrid system contract was fully earned over the years.
‘Moreover, Ghana would have earned US$15.697b from the three production fields at the close of 2019 if it had consolidated the PSA legal framework on our statute books and flying high economically instead of the US$5.145b under the hybrid system and groaning with cup in hand flying all over the world a-borrowing,’ the NGO pointed out.
With a note of caution, it added: ‘We are aware the Jubilee Partners who are the same in the TEN field, are exiting Ghana, therefore the President must be advised to act swiftly to direct the Ghana Revenue Authority, GRA, to investigate and collect all taxes due Ghana before they depart’ adding emphatically that the royalty tax/hybrid is not the in the interest of Ghanaians and must be scrapped., it concluded.
The post NGO alerts Kan-Dapaah on oil revenue as Ghana loses US¢3bn in tax under hybrid system at Jubilee Field appeared first on The Chronicle Online.
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