The Ghana Extractive Industry Transparency Initiative (GHEITI), is demanding that the Ghana Revenue Authority (GRA) investigates what it describes as a possible breach of law, oil prices quoted by operators of the Saltpond Oil fields for 2015.
The 2015 PIAC report revealed that crude oil lifted from the Saltpond Oil field was sold at 50 dollars per barrel, higher than the price quoted by one of the Jubilee partners, Anadarko which sold a barrel of crude for 44 dollars.
According to GHEITI, the low quality of crude from Saltpond should not have been affected by declining global prices as was faced by the partners of the Jubilee fields.
Some have attributed the issue to perhaps a poor hedging policy by Anadarko but the Co-Chair of the Ghana Extractive Industry Transparency Initiative, Dr. Steve Manteaw tells Citi Business News an investigation will prevent Ghana from being shortchanged in corporate taxes.
According to him, the development will also mean that Saltpond Oilfields’ profits declined hence a reduction in corporate income tax for 2015.
“The explanation that I have obtained from the revenue authorities is that it could be that Anadarko hedged badly for its crude and that is why it is reporting very low prices. But I think it makes sense for the revenue authorities to investigate and establish that nothing untoward is happening in terms of the trading of our Jubilee crude by our IOCs,” he said.
Dr. Manteaw added, “This is necessary because if any IOC operating in Ghana reports lower than market prices, then it reduces its profit margins and therefore reduces its corporate taxes payable to the government of Ghana,” he said.
The concerns of the GHEITI come on the back of renewed calls by civil societies in the oil and gas sector including the Natural Resource Governance Institute (NRGI).
The NRGI for instance wants the Ministry of Finance and the GRA to review Ghana’s legislations on the transfer pricing regime which it contends is causing the country to lose millions of revenue over lack of compliance by some of the International Oil Companies (IOCs).
Transfer pricing is a mechanism by which prices are chosen to value transactions between related legal entities within the same multinational enterprise.
Transactions may include controlled or intra-group transactions and may include the purchase or sale of goods or intangible assets, the provision of services, financing, cost allocation and cost sharing agreements.
But the system is said to be abused when enterprises inflate prices compared to the ordinary market prices otherwise referred to as arm.
This subsequently reduces their corporate tax obligations.
Jubilee partners are quoting market prices for oil
Dr. Manteaw believes that the prices quoted by the Jubilee partners as selling prices are competitive with the exception of perhaps Anadarko, due to its price hedging policy that made it receive 44 dollars for a barrel of oil.
According to PIAC, Tullow received an achieved price of 67 dollars a barrel; Kosmos 52.32 dollars a barrel while GNPC and Anadarko each received 52.36 and 44.42 percent respectively.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana