Business News of Sat, 18 Aug 20184

CNREM renews call for adoption of PNDC Law 84 in oil exploration

The Centre For Natural Resources and Environmental Management, CNREM, has reiterated its call for the rejection of the current Production Sharing Agreement, PSA, and adopt the PNDC Law 84 which is the world’s current adopted standard which ensures an equitable and fair fiscal regime for all stakeholders in the industry.

In a statement issued on Monday, CNREM, noted that if the state had adopted PNDC Law 84 Ghana would have earned US$ 11,692,300,063 for the 10 years of oil production.

According to the press release which took into consideration latest figures released by the GNPC, CNREM pointed out that it’s independent report is an analysis of amounts as reported in the Petroleum Receipts and Distribution Reports released quarterly by the Ministry of Finance from 2011-2017.

“However, our analysis is limited to operational results of the core product, the volume of oil extracted and distributed between Ghana and the Contractor Parties for export and Corporate taxes paid so far by the Contractor Parties.

“Other incomes such as surface rentals have not been accounted for because they are totally insignificant…also proceeds from gas are scanty in the Quarterly Reports, therefore we are unable to make an adequate assessment on the Gas produced,” the statement pointed out.

Backed by three statistical simulations of what Ghana should have earned in the seven years of oil exploration and production, the document signed by Mr. Solomon Kwawukumey senior partner of CNREM pointed out in the first simulation that a total of 239,738,762 barrels of oil worth US$ 19,487,166,772 were extracted and exported by December 31, 2017 from the three fields currently in operations.

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The report shows that the total allocation to Ghana, the sovereign owners, was 43,652,331 barrels of oil worth US$ 3,503,816,876 representing 17.90% of the total production revenue. “However, if corporate taxes paid by the contractor parties per our findings are added, Ghana earned US$ 4,027,121,769 representing 21% of total production revenue from crude oil.

“The contractor parties earned 196,086,431 worth US$ 15,460,045,003 representing 71% of total production revenue from crude oil. Earnings from gas by contractor parties are difficult to come by.

“However, gas proceeds earned by Ghana reported in Q4 of 2015 and Q1 of 2016 totaled US$ 9,856,621. If that is added to the revenue from the crude oil and taxes, Ghana earned a total of US$ 4,036,978,390 per our findings from both crude oil and gas,’ according to the statement.

CNREM pointed out that if Ghana had adopted the production sharing agreement which is currently the world standard and equitable and fair fiscal regime which PNDC Law 84 supported, Ghana would have earned US$ 11,692,300,063 with little or no cost to her.

The release said the country lost US$ 902.45 million in Royalties and Corporate Taxes to the contractor parties as they have under paid Ghana over the last six years under the Royalty Tax/Hybrid System which is acclaimed to be better and superior to Production Sharing Agreement by our political leaders, CNREM explained.

The statement however gave an assurance that it is pursuing these matters at the highest echelons of political decision taking as it has petitioned both the Council of State and the Commissioner General of the Ghana Revenue Authority, GRA, to have a second look at the current law which borders on the country’s economic survival and stability.

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