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Oil companies owe Ghana ground rent arrears to the tune of $2.1m in 2020 – PIAC

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Prof. Kwame Adom-Frimpong – PIAC Chair

Some oil companies operating in Ghana owe the country surface rental payment arrears to the tune of $2.1 million in 2020, representing a 34.71 per cent increase over the 2019 arrears of $1.5 million, according to the 2020 Public Interest and Accountability Committee (PIAC) annual report issued today April 21, 2021.

According to PIAC, the non-payment of this stream of income denies the Petroleum Holding Fund (PHF) the necessary funds needed for development projects.

Speaking at the live launch of the 10th annual report on the management and use of petroleum revenues for January to December 2020, PIAC Chairman, Professor Kwame Adom-Frimpong said the report found that the total gas production increased by 40 per cent.

The Sankofa Gye Nyame (SGN) Field produced the highest volume of combined Associated Gas and Non-Associated Gas among the three Fields and increased its output by 60 per cent during the period. This was mainly because gas consumption from the SGN Field was domestic, and therefore less affected by the global price fluctuations.

The report shows that the SGN Field delivered almost half (49.30 per cent) of its total raw gas produced in 2020 to the Onshore Receiving Facility (ORF), as against 46.19 per cent in 2019 representing a Year Over Year (YOY) increase of 3.11 per cent in gas exports from the Field.

However, after three years of consecutive oil production increases, the year 2020 marked a reduction in annual production volumes with the production of crude oil declining by 6.3 per cent from the 2019 volume.

The combined average achieved price of the Ghana Group for the three Fields reduced significantly by 33.5 per cent from $63.496/bbl in 2019 to $42.211/bbl in 2020 due to the impact of the COVID-19 pandemic.

According to PIAC, there was a general decline in revenue, attributed to lower production volumes and unfavourable international crude oil prices, exacerbated by the COVID-19 pandemic. Carried and participating interest declined by 40.5 per cent, surface rentals by 37 per cent, corporate income tax by 21 per cent, and royalties by 17.5 per cent.

On the operation of the Ghana National Gas Company, revenue realised from the sale of LPG decreased by 4.16 per cent at the end of the period compared with the same period in 2019.

PIAC has recommended that the  Ghana Revenue Authority should, as a  matter of urgency,  initiate action to recover Surface Rental Arrears with the appropriate interest, as provided for in the Petroleum Revenue Management Act.

The Committee since its inception has published a total of 19 Reports –10 Annual and nine (9) Semi-Annual Reports -covering the period 2011 to 2020, with information and data from the Ministry of Finance, Bank of Ghana, Petroleum Commission, Energy Commission, Ghana National Petroleum Corporation, Ghana Revenue Authority, Ghana National Gas Company and the International Oil Companies.

By Theodora Aidoo

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