Jubilee Oil Holding Limited (JOHL) has once again failed to pay proceeds amounting to US$340 million from liftings into the petroleum holding fund.
This is the fourth consecutive time, the company has reportedly not paid proceeds into the Petroleum Fund contrary to the advice of the Ghana National Petroleum Corporation (GNPC).
With this latest breach, the total amount of oil proceeds allegedly not paid by Jubilee Oil into the Petroleum Fund, stands at more than US$340 million.
This was disclosed in the Public Interest and Accountability Committee (PIAC) semi-annual report which spanned the period of January to June 2023.
Chairman of PIAC, Professor Kwame Adom-Frimpong, is calling for parliamentary intervention for the appropriate petroleum revenue laws to be applied.
“It has been a debatable area where it has been mentioned that the lifting funds are supposed to go to the Petroleum Holding Fund at the Bank of Ghana, but there are some counter-arguments. GNPC is giving its argument, the Attorney General’s advice and then PIAC is also advised. PIAC, we are of the view that the money from JOHL still should go into the Bank of Ghana as part of the Petroleum Holding Fund. This year, we have gotten $70.4 million. It’s still not gone yet.”
“So if you add up all the money that has been obtained from lifting by the JOHL, it comes to $343.1 million and our stand is that it should go, but contrary views are given. It’s a point where the debate will continue. We report to Parliament, so Parliament should come out, and the matter will be concluded,” he said in a press engagement on Thursday, October 19, 2023.
This comes amid a recent disturbing development published by The Herald that the President, Nana Akufo-Addo, has directed the allocation of the controversial JOHL revenues to secure a substantial loan from Litasco.
The Russian company, which heavily leans on the first family, has always had Edward Akufo-Addo aka “Bumpty”, the President’s kid brother linked to it.
This loan is intended to address a long-standing debt accrued through the ruling family’s involvement in the oil business since 2017, and The Herald’s findings are that the President is unwilling to seek parliamentary approval for the loan reported to be in the region of US$700 million.
A memo prepared by the GNPC boss, Opoku Ahweneeh Danquah and intercepted by The Herald, has revealed how in the presence of the Chief of Staff, Frema Osei Opare, Secretary to the President, Nana Asante Bediatuo, Minister of Finance (MoF) Ken Ofori-Atta, Deputy Minister of Energy (MoE), the Chief Executives of Karpower and Litasco, and other parties, to discuss the imminent default confronting Ghana concerning the Karpower Bank Guarantees.
The GNPC boss wrote that “on the 14th of September 2023 at 11 am GMT, the Board Chairman and I were invited to Jubilee House to meet with His Excellency, the President of the Republic of Ghana. The meeting was to provide direction on the Litasco Phase 6 Facility”.
The memo disclosed that “…the President of the Republic of Ghana instructed that GNPC and Litasco must proceed with negotiating and concluding on the Litasco Phase 6 refinancing immediately”.
It has emerged that the President’s family through a company called Stratcon Energy and Trading Limited run by Bumpty’s son, has been actively engaged in the procurement of Heavy Fuel Oil (HFO) and Light Crude Oil for power generation through Litasco since he assumed power, resulting in the accumulation of significant debt and allegations of misuse of resources within the GNPC to favour the ruling family’s business interest.
The loan, about US$430 million, will also partially settle the debt owed to Karpower, one of the Independent Power Producers (IPPs) favoured by the president.
This move has raised questions about preferential treatment for Karpower, as numerous IPPs are currently owed by the state.
Insiders suggest that this modus operandi to pay off IPPs, appears to be linked to generating additional resources for the President’s family, disadvantageous to other IPPs in the process.
Civil Society Organizations (CSOs) have been actively advocating for the return of JOHL assets hidden in the Cayman Islands at the behest of the Finance Minister and the President.
Despite persistent calls, these efforts have yet to yield results. The latest attempt to leverage JOHL revenues for securing long-term loans implies that the family wants to maintain control over these resources for at least five more years, even after the President’s term in office expires.
Insiders have also revealed that the President is pressuring Litasco to increase the loan amount to approximately US$700 million, to bolster the President’s exit strategy and extend the collateralization of the revenues to about 10 years.
As a result, he has instructed the GNPC board to swiftly approve the agreement with Litasco. This development has raised concerns about the effectiveness of the GNPC board, particularly as the decision was made in consultation with the board chairman, Freddie Blay and the CEO of the corporation, according to the Memo available to The Herald.
Some board members are expressing apprehension regarding the decision and the future accountability that may rest upon them.
Critics argue that the President’s actions seem to be aimed at exploiting backdoor channels to the International Monetary Fund (IMF) programme to further enhance his family’s wealth before the conclusion of his presidency in approximately 15 months.
The minority in Parliament has issued a warning, stating that they will not approve the transaction. However, the President appears reluctant to seek parliamentary approval.
The use of JOHL funds for these purposes, as well as the concealment of assets, raises concerns about transparency and accountability in the utilization of petroleum resources. This ongoing situation is sure to remain a subject of considerable debate and scrutiny in the coming months.
Below is the memo intercepted by The Herald;
SUBJECT: LITASCO S.A. PHASE 6 FACILITY RE-FINANCE NEGOTIATIONS
The above subject refers.
On the 14th of September 2023 at 11 am GMT, the Board Chairman and I were invited to Jubilee House to meet with His Excellency, the President of the Republic of Ghana. The meeting was to provide direction on the Litasco Phase 6 Facility.
Present at the meeting were the Chief of Staff, Secretary to the President, Minister of Finance (“MoF”), Deputy Minister of Energy (“MoE”), the Chief Executives of Karpower and Litasco, and other executives of both companies.
The parties discussed the imminent default confronting Ghana concerning the Karpower Bank Guarantees, and the President of the Republic of Ghana instructed that GNPC and Litasco must proceed with negotiating and concluding on the Litasco Phase 6 refinancing immediately.
As such, GNPC concluded better terms for the current transaction, compared to the initial terms in the non-binding term sheet with Litasco. Particularly, the interest rate, the repayment amount and the total facility amount.
The President of the Republic of Ghana, the MoF and MoE, stipulated that the total facility amount should be US$431.5 Million (the “Total Facility Amount”).
For the Total Facility Amount, it was agreed that:
1. US$155 Million towards refinancing the existing Litasco debt;
2. US$150 Million to Karpower in settlement of a debt owed by the Government of Ghana; and
3. US$126.50 Million to renew the Karpower bank guarantees.
The President of the Republic of Ghana directed the parties to give effect to this directive.
1) Litasco to provide a term sheet in respect of this transaction (copy attached).
2) GNPC Board approval for the transaction and giving the mandate for GNPC to proceed with negotiations in line with the President of the Republic of Ghana’s directive.
3) A letter from GNPC requesting MoE to provide GNPC with a “No Objection Letter”, and further requesting the MoE to secure a “No Objection Letter” from the MoF. The deadline for submission of this letter is today, 14th September 2023.
4) The MoF to provide GNPC with a “No Objection Letter”.
The Board is respectfully required to –
Issue a resolution approving the transaction and authorizing GNPC to negotiate and finalize
the necessary finance documents to give effect to the transaction, by the
President of the Republic of Ghana’s directive and the term sheet.