Detailed facts available to Asaase News about Jubilee Oil Holdings Limited (JOHL), a wholly owned subsidiary of Ghana National Petroleum Corporation (GNPC), indicates that JOHL is not required to pay proceeds from its oil lifting into the Petroleum Holding Fund (PHF) as being speculated in main stream and social media by some political actors.
Former President John Mahama, one of several political actors raising red flags about JOHL’s obligation to pay proceeds to the PHF, recently wrote on his Facebook wall: “News that some $100 million has been diverted from petroleum funds for unapproved expenditure is most disconcerting.
“Section 3 of the PRMA (Act 815) is explicit that all Petroleum revenue due the Republic derived from whatever source shall be assessed, collected and accounted for by the Ghana Revenue Authority,” Mahama’s post read on Facebook.
“Section 15 of the Petroleum Exploration and Production Act (Act 919), is also clear that “Any borrowing exceeding the cedi equivalent of thirty million United States Dollars for the purpose of exploration, development and production shall be approved by Parliament and shall be in consonance with the Petroleum Revenue Management Act.
There can be no justification for diverting revenues accruing from the nation’s share of petroleum resources into any other account aside the PHF.
The Minister for Finance must as a matter of urgency repatriate all such illegal payments back into the PHF without delay as there is no record to confirm parliamentary approval on any such loans acquired by GNPC in their work programme,” Mr Mahama further wrote in his Facebook post.
PHF non-payment
However, hard facts available to Asaase News indicate that JOHL does not pay into the Petroleum Holding Fund (PHF) proceeds from its lifting on four legal grounds.
The first is that JOHL, as an external company under the Companies Act, 2019 (Act 992), “is a separate legal entity distinct from GNPC and has its commercial operations regulated by Act 992 and not by the Ghana National Petroleum Corporations Act, 1983 (the GNPC Act).
Section 29 of the GNPC Act requires subsidiaries of GNPC to be “… established under the Companies Code, 1963 (Act 179)” (now Companies Act, 2019 (Act 992)). Therefore, Act 992, and not the GNPC Act, governs JOHL’s governance and operational structure.”
The second premise is that, “under section 7(1) of the PRMA, revenue due from the Republic of Ghana’s direct and indirect participation in petroleum operations is payable into the PHF. The activities of GNPC and its subsidiaries fall within the scope of indirect participation of the Republic.”
However, because the “revenue due” to be paid into the PHF as required by section 7(1) of the PRMA from GNPC’s subsidiaries must be determined in accordance with Act 992, “the revenue payable by JOHL to GNPC in its capacity as the sole shareholder of JOHL is dividends; GNPC is not entitled to the direct revenue or proceeds from each JOHL lifting and its operations. Thus, by extension, revenue payable into the PHF by JOHL through GNPC is dividend declared by JOHL and not proceeds from each JOHL lifting.”
The third grounds, according to the facts, is that “payment of dividends from JOHL by GNPC into the PHF is consistent with the PRMA. Section 6 recognises that GNPC may pay dividends from its subsidiaries into the PHF.
The PRMA therefore does not affect the application of Act 992 and the company law of the Cayman Islands to the operations of JOHL as a limited liability company incorporated in Cayman Islands and registered as an external company in Ghana.
GNPC must however ensure that it complies with the requirements under the PRMA, Act 992 and the company law of the Cayman Islands in respect of payment of monies by JOHL to GNPC.”
Lastly, prior to executing the transaction, “GNPC sought and received an opinion from the Attorney-General to the effect that proceeds from JOHL may be used to finance its acquisition, provide security for transactions and satisfy related costs.”
GNPC, according to the details obtained by Asaase News, “has acted accordingly and has used a portion of the revenue received as part payment for the cost of the acquisition, pay off its cash calls and other expenditure.”
Considering JOHL’s current costs and liabilities, “no dividends are due for payment to GNPC at this time as payment into the PHF. Such dividends will be paid as soon as JOHL begins to make profit and declares dividends”.
Lifting/revenue accrued to JOHL
“Consistent with a pooling agreement in place at the time of the JOHL acquisition, the entitlements of JOHL in Jubilee were pooled and lifted together with that of Anadarko WCTP Company and PetroSA Ghana Limited”, the facts indicate.
The information available further posits that, “three of such pooling were executed on 27 September 2021, 13 November 2021 and 30 December 2021, in accordance with the terms of the transaction.
“The pooling arrangement terminated on 31 January 2022, following which JOHL did an independent lifting on 26th April 2022.
JOHL has thus far, received a total of One Hundred and Fifty-Three Million, One Hundred and Eighty-Eight Thousand, Six Hundred and Fifty-Six United States dollars and Eighty-Eight cents (USD153,188,656.88) from inception to 30 September 2022.”
