Fair-Trade Oil Share Ghana Critique of Petroleum Commissions (Part - - PowerPoint PPT Presentation
Fair-Trade Oil Share Ghana Critique of Petroleum Commissions (Part 1) Presentation to the Council of State Overview: Ghanas Oil and Gas Fiscal Regime, of 27 Feb 18 GHANA GHANA GHANA GHANA OIL OIL OIL OIL FTOS-GH
FTOS-GH DIASPORA EXECUTIVE COUNCIL (DEC) Analytical Support Group (ASG) GhanaHero.Com & Associates
6 Apr 18 Contact: professor.lungu@yahoo.com
“Overview: Ghana’s Oil and Gas Fiscal Regime”, of 27 Feb 18
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(Part 1)
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(FTOS-Gh) Campaign/Diaspora Executive Council, (DEC), of the "Presentation" by the Petroleum Commission (PC) to the Council of State (CoS) in February of this year, and the earlier one presented to the Parliament of Ghana in 2016, is dedicated to the memory of Dr. Prosper Yao Tsikata, one of the Campaign’s more prolific writers and strongest
Valdosta State University, Georgia, USA, where he was Professor of Health Communications. Professor Tsikata earned a M.S. in Communication and Development, Journalism & Public Relation, Applied Social Research, and a Ph.D. in Health Communications. In a brief but moving tribute to Dr. Tsikata on Ghanaweb titled "Gone but not forgotten", Rosetta wrote: "Condolences to the family! Prayer for healing and strength to you all . God Bless. Prosper was kind, always had a smile on his face, polite and concerned about people he came in contact with on a daily basis. He's being missed at work.” Afroman added: "...We need fighters of such caliber to move forward as a nation and continent...". Rest in Peace, Yao Tsikata! And many thanks for making Ghana and the World a better place than you found it (FTOS-Gh/DEC-ASG… Dr. A. Dotse & Prof Lungu, on behalf of all Diasporans).
READ MORE: (1) http://www.blakkpepper.com/2018/03/celebrated-scholar-dr-prosper-yao-tsikata-dead/ (2) http://www.vsuspectator.com/2018/03/20/beloved-vsu-professor-passes-away/ (3) https://www.ghanaweb.com/GhanaHomePage/NewsArchive/Shock-as-US-based-Ghanaian-Professor-Prosper-Yao-Tsikata-passes-on- 635948/ .
aggravating loss of oil revenues totalling $136,300,000.00 during 2007-2016, and
uncollected/underpaid royalties in the amount of $136,300,000.00, with interest.
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Commission (PC) on the appropriate fiscal system for Ghana’s Oil establishes “Markers” for sovereign independence and “Points of Order”.
“Clarification Meeting” presentation to Parliament of Feb. 2016. Therefore, we thought it was important to look at both products in crafting a response the average Ghanaians and Members of the CoS could easily understand, aided by some perspectives on history of the discourse and impartial lenses.
Production Sharing Agreements (PSA), Errors and Mis-statements by the PC; and five (5) questions to be asked of the PC by the CoS and others.
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NOTE: Beyond under payment of royalties, this review does not cover other under- payments (e.g. corporate income taxes (CIT)), by the oil companies. That matter is addressed by the FTOS-Gh/PSA Campaign in other papers, documents, reports, and official complaints.
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GNPC Expenses Directly Related to Petroleum Exploration, Development, and Production (2011 - 2013) USD ($) Jubilee Equity Financing Cost 334,577,757.00 Projects Other than Jubilee, TEN, Sankofa, Gye Nyame 20,707,003.00 TEN Project Cost 3,027,153.00 Gas projects related Costs 33,707,403.00 TOTAL 392,019,316.00
FALLACY: A common fallacy among many Ghanaians is that Ghana does not spend a
pesewa on petroleum exploration, development, or production. Therefore, the Oil Companies are entitled to what they take. This is false. In their 2013 report, PIAC reported that during 2011-2013 alone, GNPC spent no less than $401,942,000 on those activities. This amount excludes expenses for “Staff Costs”, and “General Operational, Administrative, and Capital Expenditures”, etc.
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BIG MEN: (Ghana) - Brad Pitt sponsored film followed a group of American “explorers” at Dallas-based oil company Kosmos Energy during 2007 - 2011 “with unprecedented, independent access” (Big Men, directed by Rachel Boynton). *** (See Movie About Ghana!)
ACCESS: Some dey enjoy! Some dey suffer, brutal! ‘POVERTY… prevalent in Ghana’
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patently servile because it does not imply “fair trade”:
– Production Sharing Agreements (PSA) can do same.
payment of an ad-valorem royalty" (page 7)” is in practice a ruse:
– PSAs also feature “Royalty”, from “Gross Production” – As we will show, PC is wrongly applying the principle, as evidenced in their latest “Presentation to the Council of State” (2018).
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(https://www.woodmac.com/reports/upstream-oil-and-gas- ghana-upstream-summary-980468)
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main elements are royalty, income tax and an additional profits tax (called Additional Oil Entitlement, or AOE) which is based on rates of return. Specific terms exists for deepwater developments, with lower royalty and AOE rates. Following the significant Jubilee discovery, the Ghanaian government has made slight fiscal changes to recent petroleum agreements...".
(https://www.woodmac.com/reports/upstream-oil-and-gas-ghana-upstream-fiscal- summary-16121612).
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“World Class Financial Paybacks” to Oil Companies alone
Petroleum Commission is implementing a Concession system, without bonuses, ring fences, cost ceilings; misapplying “Royalty”
Ghana improve on Oil Revenue Collection, choosing instead to focus “Revenue Management”, a “Trojan Horse”
revenues never collected.
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(KOSMOS) foundation of high- margin cash flow”.
production into improving macro environment – Declining
expansion – ~$40/bbl operating margin at $60/bbl Brent in 2018”.
http://www.kosmosenergy.com/pdfs/KosmosEnergy4QandFullYear2017ResultsStrategyUpdate.pdf
GHANA: The FTOS-Gh Campaign found KOSMOS expects to pay $2.50 -$3.50 / barrel of oil in 2018. EQUATORIAL GUINEA: The FTOS-Gh Campaign estimates KOSMOS is expecting to pay $11.00 -
$13.00 per barrel of oil, in taxes. (“Kosmos acquired shares in a producing field 43,000 bopd”).
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https://resourcegovernance.org/blog/tullow-disclosure-yields-insight-ghana-oil- gas-sector 15 Your’s Your’s
ARCHIVE COPY AT: http://www.ghanahero.com/FTOS-GH/FTOS-GH- PSA-Library/Ghanas_Royalty_Tax_Fiscal_System_20Feb2016.pdf
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Royalty: “Guaranteed minimum Government Take through the payment of an ad-valorem ‘royalty’” (page 7). Ad va·lo·rem -- In proportion to the estimated value of the goods or transactions (Not “Cash Flow”).
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PC Said…● “No one type of fiscal regime is better than the other…Fiscal Systems can be designed to yield the same Government Take”:
WE SAY…. Spurious argument. We could in principle use bags of cocoa produced in Ghana to estimate how much in “Government Take” Ghana needs, but that would be specious.
PC Said…● “Headline names by themselves don’t matter”:
WE SAY: But, YES, they do! If concessions were perfect for independent sovereigns, PSAs would not have been invented in the first place. SOVEREIGN IMPERATIVE: Ensuring payments are received sooner, rather than later, is an important objective of PSAs for Nations-States (NEGOTIATIONS / Royalties / Bonuses, etc.).
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PC also says: “Government Take is…based on the net (not gross) revenues”. INCORRECT: Some portion of “Gov. Take” is based on Gross (e.g. Royalty). Further, for transparency and accurate accounting purpose, there’s no reason why “Bonuses” cannot be added for a particular year, unrelated to “net. (Negotiation, Compliance ).
Socio-Economic Opportunities
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