The Ghanaian government has successfully concluded the divestiture of Jubilee Oil Holdings Limited (JOHL) shares, an offshore entity, transferring them to GNPC Explorco, a subsidiary of the Ghana National Petroleum Corporation (GNPC).
This milestone was disclosed in a report presented by the Parliament’s Committee on Mines and Energy during the third session of the 8th Parliament.
The completion of this share transfer addresses longstanding concerns raised by the Public Interest and Accountability Committee (PIAC), a state watchdog, regarding the use and management of oil revenues. Civil society organizations (CSOs) in the fields of extractives, anti-corruption, and good governance had also advocated for the expeditious execution of this transfer.
The move follows a directive by parliament instructing GNPC to swiftly initiate the process of transferring the JOHL shares to its subsidiary, Explorco.
This directive demonstrates a commitment to transparency and effective management of national resources, aligning with the government’s efforts to address concerns raised by oversight bodies and civil society.
The transfer of JOHL shares to GNPC Explorco is poised to have implications for the oil and gas sector in Ghana, potentially influencing future exploration and development initiatives. As GNPC’s subsidiary, Explorco is strategically positioned to contribute to the corporation’s overall objectives and play a vital role in the efficient utilization of the country’s oil resources.
The successful conclusion of this divestiture underscores the collaborative efforts between the government, parliament, and relevant stakeholders to ensure responsible management of Ghana’s oil wealth.
It marks a positive step towards enhancing accountability, addressing public concerns, and fostering transparency in the utilization of revenue generated from the country’s oil sector.
Meanwhile, 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.
7% Commercial Interest in Jubilee and TEN Oil Fields
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 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.
Moreover, 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.
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