The Ghana Extractives Industries Transparency Initiative (GHEITI) has expressed serious legal issues in its most recent report on the oil and gas industry, over the awarding of a $164 million loan to the Ghana National Petroleum Corporation (GNPC).
The loan, which was made possible by the acquisition of Jubilee Oil Holdings Limited (JOHL), has been declared illegal since it was carried out without the required support from Parliament.
The GHEITI Report noted that the loan transaction violates both Section 57(1)(f) of the Public Financial Management Act, 2016 (Act 921) and Article 181(1)(2)(3) of the 1992 Constitution.
The absence of a loan agreement specifying the tenure and terms of repayment further complicates the matter, as the transaction was solely based on written communication between the Ministry of Finance and GNPC, according to the report.
In addition, the GHEITI Report disclosed that investigations at the Registrar of Companies showed that JOHL was registered in Ghana on August 15, 2022, as an external (foreign) corporation with a presence in the nation.
This raises concerns since, at the time of the loan acquisition, JOHL had not been registered to conduct business in Ghana. Furthermore, the report highlighted that the Petroleum (E&P) Act, 2016 (Act 919) necessitates the incorporation of a local company to hold interest in a petroleum block.
Consequently, the acquisition of a stake and subsequent lifting of crude oil by JOHL, prior to its incorporation in Ghana, is in direct violation of Section 70(1)(a) of Act 919, which mandates the incorporation of a local entity to engage in petroleum activities within the country.
GNPC Cautioned To follow Through On Its Pledge To Transfer JOHL’s Interests To Explorco
Adding to the complexity of the situation, the GHEITI Report disclosed that despite GNPC’s assurance of transferring JOHL’s interests to Explorco, GNPC is yet to fulfill this commitment.
According to the report, if the current arrangement is maintained, JOHL will continue to lift and sell crude oil while funding its commercial interests in the two fields as a subsidiary of GNPC.
Regardless of these findings, the GHEITI report reiterated the recommendations made in the Auditor-General’s report on procurement violations recorded in 2020.
It urged GNPC to provide clear timelines for the transfer of JOHL’s interests to Explorco, emphasizing the need for transparency and compliance in order to uphold industry standards and regulatory frameworks.
This information from the GHEITI report highlights the complex legal nuances underlying the GNPC’s loan acquisition through JOHL and raises concerns about the corporation’s compliance with legal requirements and financial management guidelines.
It is critical for GNPC to address these worries and take the required actions to maintain openness, accountability, and compliance within the oil and gas sector, as stakeholders and the general public await for further developments.