Business News of 2013-03-05

Ghana’s oil: PIAC wants forensic audit

The Public Interest and Accountability Committee (PIAC) says the government must conduct a forensic audit into the US$4.2 billion expenditure supposedly incurred by the Jubilee Partners prior to the start of oil production in 2010.
That, it said, would help ascertain the veracity or otherwise of the figure so as to prevent the companies from ripping the country off her nascent oil revenues in the name of capital gains recovery.
The five Partners of the Jubilee Field, prior to the start of oil production in December 2010, said their investments from 2007 (when wells and field development and appraisals started) to 2010 (when actual production of oil took off) amounted to US$4.2 billion.
That investment, which is expenditure to the companies, is, however, classified as recoverable cost per the agreement entered into by the partners and the Government of Ghana (GoG). The law further allows the companies to recover that cost at 20 per cent interest per annum over a five-year period, starting from the first year of oil production.
While declining to say whether or not the committee doubted the US$4.2 billion figure put out by the companies as the total amount incurred prior to oil production, Mr. Ishmael Edjekumhene, a member of the PIAC, said only a forensic audit could help reveal the cost build-up.
"Who am I to say I doubt that figure? What we are saying is that the Ghana Revenue Authority (GRA) and, maybe the Auditor General's Department (AGD), should collaborate and conduct a forensic audit into the cost build-up so that we all can be sure of what accounted for that US$4.2 billion," he said.