[ 2016-07-11 ]

Probe Saltpond Oil prices for 2015 – GHEITI to GRA
The Ghana Extractive Industries 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, lower 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 Industries 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

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.

Source - citifmonline.com

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