Business News of 2014-06-03

Finance Ministry wants clarification on Saltpond Offshore

The Ministry of Finance and Economic Planning has requested the Ghana National Petroleum Corporation (GNPC) to furnish it with the corporate income tax position of Saltpond Offshore Producing Company operated by Lushann Eternit Energy Limited, following concerns that the company has reneged on some of its obligations to the state.

An economist at the Energy, Oil and Gas Unit of the Finance Ministry, Dr. Joseph Kwadwo Asenso, explained at a World Bank meeting on petroleum revenue management in Accra that the Ministry is equally concerned as some civil society organisations about the tax status of Saltpond Offshore Producing Company and has made an official inquiry to understand the company’s tax situation.

“Revenue from Saltpond Offshore is an issue we’ve also been asking ourselves about, and we have written to GNPC for more information.

But for now, what (revenue) we have been receiving from the Saltpond operators are royalties and surface rentals. So it is not only royalties, they’ve been paying surface rentals as well.

“But we want clarification on the corporate income tax as well. There are a number of issues that we have raised with GNPC and they have assured us that they are working on them,” he said.

Dr. Joseph Kwadwo Asenso made this known in response to an accusation by Executive Director of the Africa Centre for Energy Policy, Mohammed Amin Adam: that Saltpond Offshore has defaulted on its surface rentals and corporate income tax liabilities to the state.

The Saltpond oil field, which was discovered in 1970 by Sigmal Amoco, lays 12km offshore Saltpond Town in 85 feet of water and covers an area of approximately 5km square.

In 2000 GNPC, which represents the government of Ghana, entered into a joint venture agreement with Lushann Eternit Energy Limited, a Ghanaian subsidiary of Lushann International energy Corporation of Houston, USA, to further develop the Saltpond Field.

According to the agreement signed between the two entities, Lushann will pay 3% royalty for oil, income tax in accordance with the Petroleum Income Tax Law, 1987 (PNDCL 188), levied at the rate of thirty percent (30%), and surface rentals of US$50 per square kilometre of the area remaining at the beginning of each Contract Year as part of the development and production area.

The agreement also requires Lushann to make payments for rental of government property, public lands or for the provision of specific services requested by the company from public enterprises.

Source: B&FT
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