The Public Interest Accountability Committee (PIAC) says the justification by the Ghana National Petroleum Corporation (GNPC), for failing to pay royalties from the Saltpond Oil fields in 2015, may not be tenable if it emerges that the company produced at least a barrel of oil during the period.
According to the committee, the oil company cannot be exempted from paying royalties since that tax component is calculated on a company’s actual production levels and not on the profit margins.
“You will have to pay royalty tax on what you produce no matter how small it is; royalty will be levied on the production itself. The justification that a company did not pay royalties because the company’s operations are not viable, is not tenable because royalties is about production and not about profits,” a member of PIAC, Dr. Steve Manteaw explained.
A 2015 semi-annual report by PIAC also revealed that the Saltpond Oil Production Company Limited failed to pay about US$ 37,129 in royalties representing three percent of the company’s revenue for 2015.
This came despite the oil field lifting 25,453 barrels of oil in the second quarter of 2015.
The Chief Executive Officer of GNPC, Alex Mould in a Citi Business News interview said the decision was taken since the company was not economically viable at the time.
He however explained that discussions between the Petroleum and Finance Ministries and operators of the oil production field are ongoing to get the royalties paid.
“The issue about them not paying royalties is a fact. With the oil prices going down, Saltpond oil fields basically is not commercially viable and we have to ensure that we keep a skeleton staff on the rig to make sure for health and safety purposes, the oil rig is functioning,” Alex Mould stated.
He added, “We are in discussion with the government with regards to what is owed by SOPCL, the Ministry of Petroleum is also in discussion with Lushann- the operator of the field, to bring in a third party to revamp the field.”
But Dr. Steve Manteaw tells Citi Business News the reason cannot be upheld if investigations prove otherwise.
He maintains that the development has been as a result of the inability to establish reports from the oil company and Ministry of Finance on whether or not the oil company produced any quantities of barrels of oil for the period under review.
“Royalty will be levied on the production itself and that is why we need to be able to determine whether the period under review, Lushann International or the operators of Saltpond Oil Fields produced oil. If it produced even one barrel of oil, it is liable to royalty tax,” Dr. Manteaw stated.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana