US$310m remains outstanding to Petroleum Holding Fund

An audit assessment undertaken by PricewaterhouseCoopers on behalf of the Auditor General has revealed that a total outstanding debt of US$310.34 million is owed the Petroleum Holding Fund Most of this is debt of Ghana National Gas Company Limited which owes US$308.77 million for gas supplied by the Ghana National Petroleum Corporation (GNPC).

The remaining outstanding debt of US$1.57 million comprises surface rental fees which have not been paid by a number of petroleum exploration entities namely, GOSCO/Heritage Exploration and Production Ghana Ltd, Sahara Fields Energy Ltd, Britannia-U Ghana Ltd and Swiss African Oil Company Ltd.

Regarding Sahara Fields Energy Ltd, Britannia-U Ghana Ltd and Swiss African Oil Company Ltd, the audit assessment indicates that the three companies have failed to honour their payment obligations despite stringent efforts to have them pay.

To ensure payment, the Ghana Revenue Authority (GRA) is collaborating with the Petroleum Commission to ensure the companies comply or face the necessary sanctions.

This is contained in the recent report on Management of Petroleum Funds for 2018 which has since been submitted to Parliament.

In fact, section 3 subsection 2 of Petroleum Revenue Management ACT 2011 (Act 815) requires that petroleum revenue assessed as due in each month shall be paid by direct transfer into the Petroleum Holding Fund by the 15th day of the ensuing month by the entities obliged to make the payment. However, such petroleum entities failed to make payments.

Also, section 3 subsection 4 of Act 815 states that where the liability of an entity to make a payment is not discharged on the required date, the entity shall pay as a penalty, an additional five percent of the original amount for each day of default or the default rate established under any other law.

Consequently, the Auditor General estimates the number of penalties due from the default to be US$10.79 billion as per section 3 subsection 4 of Act 815.

The failure of the petroleum entities to make payments to the Petroleum Holding Fund implies that there a loss of income which would have been earned if the funds had been paid by the entities on time and invested.

To strengthen business control and improve operational efficiency, the Auditor General is recommending that monies due to the Petroleum Funds should be promptly collected and any late payments should attract interest as stipulated by Section 3 subsection 4 of Act 815.