$560M PETROLEUM FUNDS BATTLE: PIAC AND GNPC EXPLORCO

The ongoing dispute between the Public Interest and Accountability Committee (PIAC), the Ghana National Petroleum Corporation (GNPC), and its subsidiary Explorco has intensified, with the matter now formally referred to the Office of the Attorney-General for legal interpretation.

At the heart of the disagreement is a critical question: Can Explorco, as a commercial subsidiary of GNPC, legally retain revenue generated from petroleum liftings outside the Petroleum Holding Fund (PHF), or must all such revenues be transferred to the state in accordance with the Petroleum Revenue Management Act (PRMA), 2011 (Act 815)?

According to PIAC, Explorco has failed to account for and transfer petroleum revenues amounting to US$561,648,785.35 due to the Republic between 2022 and 2024. The Committee says this has occurred despite numerous recommendations and directives issued over the years.

The latest development was disclosed during a media engagement on PIAC's recent petroleum revenue report, which highlighted the growing disagreement over whether Explorco has unlawfully retained petroleum revenues outside the Petroleum Holding Fund.

PIAC's Position

PIAC's position is grounded in the provisions of the Petroleum Revenue Management Act, 2011 (Act 815).

The Act states that "Petroleum Revenue due to the Republic derived from whatever source, shall be assessed, collected and accounted for by the Ghana Revenue Authority (GRA)," while such revenues "shall be paid by direct transfer into the Petroleum Holding Fund."

The legislation further provides that the PHF was established "to receive and disburse Petroleum funds due to the Republic."

Based on these provisions, PIAC maintains that both GNPC and Explorco are required to account for and transfer the outstanding US$561 million into the Petroleum Holding Fund. The Committee argues that any failure to comply undermines the credibility and integrity of Ghana's petroleum revenue management framework.

Matter Referred to Parliament and Attorney-General

Speaking to the Business & Financial Times (B&FT), PIAC Chairman Richard Kojo Ellimah explained that the Committee had exhausted the limits of its oversight mandate after years of unsuccessful attempts to secure compliance.

"We realised that the situation had gone beyond our statutory mandate, hence our decision to seek Parliament's intervention"

According to Mr. Ellimah, PIAC subsequently presented the matter to Parliament's Select Committee on Finance during discussions on its latest report, after concerns repeatedly raised in annual and semi-annual reports failed to result in corrective action.

"At a meeting with the Parliament Select Committee on Finance, PIAC tabled the issue before the committee and called for swift action. The committee, however directed us to seek clarity from Attorney-General", Ellimah said.

He emphasized that PIAC's position has remained unchanged throughout the dispute.

"Explorco, or Its predecessor company JOHL, lifts Petroleum for GNPC, a state-owned entity, Therefore proceeds from that lifting necessarily belongs to the state and irrespective of the status of Explorco under the Companies Act, these proceeds must be deposited into the PHF", he stressed.

Concerns Over Petroleum Governance

Mr. Ellimah further warned that GNPC's handling of the matter could create a troubling precedent for the country's petroleum governance system.

"The stubborn refusal to deposit the proceeds of Explorco's liftings into the PHF sets a bad precedent. It create the impression of a recalcitrant company that has no regards for the law with impunity" he added.

He also cautioned that continued non-compliance could damage public confidence in Ghana's national oil company.

"if this behavior continues, GNPC will lose public trust as our national oil company and that would be a disaster. The state cannot be a subordinate to this impunity".

Legal Interpretation of the PRMA

Also weighing in on the issue was Veronica Adigbo, a member of PIAC and representative of the Ghana Bar Association (GBA), who argued that the Petroleum Revenue Management Act does not permit Explorco to retain petroleum revenues in the manner alleged by the Committee.

She pointed specifically to Section 3 of the PRMA, which outlines the mandatory process for handling petroleum revenues.

"Section 3(1) of the PRMA that 'Petroleum Revenue due to the Republic derived of from whatever source shall be assessed, collected and accounted for by the Ghana Revenue Authority.'

"Section 3(2) further provides that 'the petroleum revenue assessed as due in each month shall be paid by direct transfer into the Petroleum Holding Fund by the fifteenth day of the ensuing by the entities obliged to make the payment'.

"Section 3(3) also states that "the entity shall notify the Ghana Revenue Authority in writing of the payment into the Petroleum Holding Fund," she elaborated.

According to Adigbo, the repeated use of the word "shall" throughout these provisions leaves little room for interpretation or discretion.

"The use of the word 'shall' in the above provisions makes the deposit of the petroleum revenue mandatory," she stressed.

Awaiting Legal Clarification

With the matter now before the Attorney-General, attention will be focused on the legal interpretation of whether Explorco's retention of petroleum revenues is consistent with the Petroleum Revenue Management Act.

The outcome is expected to have significant implications for Ghana's petroleum revenue governance framework, particularly regarding the management, accountability, and transparency of revenues generated from the country's petroleum resources.

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Hayford Emmanuel Kofi Yeboah. Researcher, Black Gold Bulletin