Government has completed the divestiture of Jubilee Oil Holdings Limited (JOHL) shares, an offshore entity, to GNPC Explorco – a subsidiary of the Ghana National Petroleum Corporation (GNPC).
Parliament’s Committee on Mines and Energy revealed this in its report in the third session of the 8th Parliament. The transfer of shares to Explorco puts to bed longstanding requests by the Public Interest and Accountability Committee (PIAC), a state watchdog, over use and management of oil revenues; and civil society organisations (CSOs) in extractives, anti-corruption and good governance for expeditious execution of this transfer.
This follows an earlier directive by parliament instructing GNPC to expeditiously initiate the process of transferring the shares to its subsidiary, Explorco.
Parliament’s directive and subsequent action also underscores the influence wielded by civil society and regulatory bodies in shaping the trajectory of Ghana’s energy policies and governance.
JOHL, the offshore company registered in the Cayman Islands, was acquired by GNPC through an over-US$164million ‘share purchase agreement’ between Ghana and Anadarko WCTP Company in 2021, when the latter announced plans to offload its interests.
The company holds 7 percent commercial interest in Jubilee and TEN oil fields operated by Tullow Ghana.
Although acquisition of the stake was well-received, the decision to incorporate JOHL in the Cayman Islands – a tax haven – per the argument of PIAC and CSOs complicates the nation’s interest in the oil fields, injects risks of revenue leakages and violates the transparency and accountability mechanisms established in the Petroleum Revenue Management Act (PRMA), according to many industry watchers and corruption fighters.
It made its first oil lifting of 944,164 barrels of oil in the Jubilee Field during the first half of 2022, realising over US$100million.
In 2022 alone, JOHL’s stake raked in some US$290million, according to the 2022 PIAC annual report. Total payments for cash calls (including fields in which Explorco holds an interest) amounted to US$83million – leaving a gross margin of US$207million for GNPC/JOHL from the Jubilee and TEN fields.
PIAC, a public watchdog that oversees the use and management of oil revenues, expressed concern about how GNPC used JOHL to carry out operations that were not approved in its plan; for example, in 2022.
Two notable examples are Explorco cash calls on Springfield, ENI Block 4 among others at US$5,546,419 – and decommissioning the Saltpond oil rig at US$11,000,000.
Responding to the action taken by government, Technical Manager-PIAC, Mark Agymang said: “PIAC has always been in constant discussions with GNPC, therefore we are not surprised with the current development. GNPC has since exhibited good faith by telling PIAC in its meetings that they are working on the process of transferring the shares to Explorco”.
However, he added that PIAC had always argued and still maintains that revenues from the resultant operations and earnings of JOHL will have to be lodged in PHF.
In view of this, he concluded that revenues that come from Explorco’s operations concerning the shares they have been assigned should be lodged into PHF, adding that the subsidiaries of GNPC should endeavour to focus on their specific mandates.
Also, the Head, Policy Lead, Petroleum and Conventional Energy at Africa Centre for Energy Policy (ACEP), Kodzo Yaotse, stressed the need for thorough accountability of the revenues accrued to JOHL – despite the transfer’s belated status.