A member of the Public Interest and Accountability Commission (PIAC), Steve Manteaw, has urged the Petroleum Commission and the Ghana Revenue Authority (GRA) to, as a matter of urgency, monitor closely expenditures incurred by the Jubilee Partners on the repudiation on the challenges the country has on the turret bearing on the FPSO Kwame Nkrumah.
According to him, this has become necessary since the current development on the FPSO with regard to the contingent measures put in place to mitigate the damning effects of the malfunction turret bearing by members of the Jubilee Partners will have serious implications on the tax obligations to the government.
Oil production from the country’s oil fields, according to the Annual Report of the Public Interest and Accountability Committee (PIAC) on Management of Petroleum Revenues for the year 2016, suffered a major setback in February 2016, when the turret bearing of the FPSO Kwame Nkrumah began to malfunction.
The report reveals that the problem with the turret bearing of the FPSO Kwame Nkrumah and the consequential remediation works it engendered significantly curtailed average daily oil production to 73,720 bbls/day in 2016 down from an average daily production of 100,000 bbls/day since 2013.
Explaining the need for the Industry regulator, Petroleum Commission, and GRA to be vigilant at the sidelines of a three-day workshop organised by the Institute of Financial and Economic Journalists (IFEJ), in partnership with GIZ/SECO held at Koforidua over the weekend, Dr. Manteaw noted that with the remediation exercise being carried out by the Jubilee Partners are at their own expense by bringing in two tug boats, and the country’s tax laws allow these companies to recover their cost before fulfilling their various tax obligations to the state and for that matter there is the need for these state institutions to monitor that cost.
“So if you have a technical problem and you try to remediate it by bringing in a tug boat, you hire them and every month you pay some amount which needs to be taken into account because the laws allow the companies to recover all their cost before they can become taxpaying position. So far instance, if you make an investment in terms of bringing in the tug boats to help deal with the situation that cost will be deducted from your total income before you pay tax, so it makes it imperative for the regulator (Petroleum Commission) and also GNPC who is also a partner in the operation to monitor this cost,” he said.
The FPSO Kwame Nkrumah was designed with an external turret to allow weather vanning. However with the damage of some of the turret bearing during the first quarter of 2016, the FPSO could not weather vane as per the designed therefore necessitating the introduction of a new operating and off take procedure which entailed the utilization of three (3) tug boats to hold the FPSO in place, a dynamically positioned shuttle tanker and a Storage tanker.
Although Ghana’s actual petroleum receipt in 2016 of US$ 247.18 was 29% lower than the budgeted amount (US$ 348.42 million) and translate to 44% year –on-year reduction in annual petroleum revenues when compared to the 2015 receipts of US$ 396.17 million as a result of a malfunction turret bearing, the Jubilee Partners under same unfortunate circumstances made some gains or received substantial income through the Corporate Loss and Production Income (LOPI) Insurance policies. Kosmos received US$ 74.8 million of LOPI proceeds, Tullow also got US$ 90.1 million and Anadarko also received US$ 31 million in respect of the turret bearing damage on the FPSO Kwame Nkrumah during 2016.
Source: therepublicnewsonline.com/Nana Appiah Acquaye