Ghana lost over $900M in oil royalties, taxes – Think Tank – Business

Ghana lost about $902.45 million in the oil sector because some of the oil companies in the country paid less taxes and royalties to the state.

This is an allegation made by an oil and gas policy think tank, Centre for Natural Resources and Environmental Management (CNREM).

The centre explained that Ghana made less than 20% of revenue despite the oil resource in the coutry.

In an interview with Accra-based Citi FM, the Executive Director of CNREM, Solomon Kwakumey said his outfit had presented a report Council of State on the matter. They have also petitioned the Council of State.

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Subsequently, a meeting was held where they presented their arguments to the Council, and the Petroleum Commission also did a presentation.

“At the meeting, the Petroleum Commission presented a report to the Council of State that Ghana had $359 million for the six years of operation.”

He said after analysing the Petroleum Commission’s report “to the terms of the Jubilee Field Agreement, Taxation and Accounting Principle, we discovered that this is how much Ghana was losing which is $902.45. We were able to calculate how much we lost in royalties and how much we lost regarding taxes.”

Mr. Kwakumey also added that he has petitioned the government to adopt the production sharing method over the current hybrid system in order to make more money from Ghana’s oil.

According to Mr Kwakumey if Ghana were to be practicing the production sharing agreement, at the end of the 7th year of oil production, the country would have “been earning over 11 billion dollars as against the under 4 billion dollars that Ghana has earned for the seven years of operation.”

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“The hybrid system is skewed towards the collection of taxes and royalties. It is very difficult to collect taxes from multinationals. Secondly, under the hybrid system, we transfer our sovereignty and ownership of the oil to the foreign oil companies. The hybrid system is just a small modification of traditional concession…just as the way we have given out our gold concessions where we get only taxes and royalties from the mining companies; it is the same old thing being applied in the oil sector.”

He further explained that under the production sharing agreement, the host nation and foreign oil company share the output of the oil.

This he said is “because the oil is our sovereign property under the production sharing agreement. You don’t transfer it to the foreigner, we still have control over it, so it is only output that is shared and not money.”

He argued that some countries including Nigeria and Congo are making more from their oil resources because they are practicing the production sharing method.

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