PIAC escalates US$561m GNPC-Explorco dispute

By Kizito CUDJOE

The Public Interest and Accountability Committee (PIAC) has escalated its dispute with the Ghana National Petroleum Corporation (GNPC) and its subsidiary, Explorco, to the Office of the Attorney-General (AG), after repeated demands for the entities to account for more than US$561 million in petroleum revenues failed to secure compliance.

According to PIAC’s latest report, Explorco, GNPC’s oil exploration subsidiary, failed to account for and transfer petroleum revenues amounting to US$561,648,785.37 due the Republic between 2022 and 2024, despite several recommendations and directives issued by the Committee over the period.

PIAC disclosed the latest move during a media engagement on its recent petroleum revenue report, signalling a sharp escalation in the growing dispute over whether Explorco unlawfully retained petroleum revenues outside the Petroleum Holding Fund (PHF).

Central to the controversy is whether Explorco, as a commercial subsidiary of GNPC, can legally retain proceeds from petroleum liftings outside the Petroleum Holding Fund structure or whether all such revenues must accrue directly to the state under the Petroleum Revenue Management Act (PRMA).

According to the Petroleum Revenue Management Act, 2011 (Act 815), “petroleum revenue due the Republic derived from whatever source shall be assessed, collected and accounted for by the Ghana Revenue Authority (GRA),” while such revenues “shall be paid by direct transfer into the Petroleum Holding Fund.”

The Act further states that the PHF was established “to receive and disburse petroleum revenue due the Republic.”

It is against this backdrop that PIAC insists GNPC and Explorco must account for and transfer the outstanding US$561.6 million into the PHF, warning that failure to resolve the matter risks undermining the credibility and integrity of the country’s petroleum revenue management regime.

The Chairman of PIAC, Richard Kojo Ellimah, told the B&FT that the Committee had exhausted the limits of its oversight mandate after years of unsuccessful attempts to compel compliance.

“We realised that the situation had gone beyond our statutory mandate, hence our decision to seek Parliament’s intervention,” he said.

According to him, PIAC subsequently tabled the matter before Parliament’s Select Committee on Finance during deliberations on the latest report, after repeated concerns raised in its annual and semi-annual reports failed to trigger corrective action.

“At a meeting with the Parliamentary Select Committee on Finance, PIAC tabled the issue before the Committee and called for swift action. The Committee, however, directed us to seek clarity from the Attorney-General,” Mr. Ellimah stated.

He maintained that PIAC’s position on the matter has remained consistent over the years.

“Explorco, or its predecessor company JOHL, lifts petroleum for GNPC, which is a state-owned entity. Therefore, proceeds from that lifting necessarily belong to the state and, irrespective of the status of Explorco under the Companies Act, must be deposited into the PHF,” he stressed.

Mr. Ellimah described GNPC’s refusal to transfer the proceeds into the Petroleum Holding Fund as a dangerous precedent for the country’s petroleum governance framework.

“The stubborn refusal to deposit the proceeds of Explorco’s liftings into the PHF sets a very bad precedent. It creates an impression of a recalcitrant company that brazenly disregards the law with impunity,” he said.

“If this attitude continues, public trust in GNPC as our national oil company will be eroded, and that will be disastrous. The state cannot be an accessory to this impunity.”

Also weighing in on the legal interpretation of the matter, a member of PIAC representing the Ghana Bar Association (GBA), Veronica Adigbo, argued that the PRMA does not permit Explorco to retain petroleum revenues in the manner alleged by the Committee.

She explained that Section 3 of the PRMA makes the transfer of petroleum revenues into the Petroleum Holding Fund mandatory.

“Section 3(1) of the PRMA states that ‘petroleum revenue due the Republic derived from whatever source shall be assessed, collected and accounted for by the Ghana Revenue Authority’.

“Section 3(2) further provides that ‘the petroleum revenue assessed as due in each month shall be paid by direct transfer into the Petroleum Holding Fund by the fifteenth day of the ensuing month by the entities obliged to make the payment’.

“Section 3(3) also states that ‘the entity shall notify the Ghana Revenue Authority in writing of the payment into the Petroleum Holding Fund’,” she explained.

Ms. Adigbo argued that the repeated use of the word “shall” in the provisions leaves little room for discretion.

“The use of the word ‘shall’ in the above provisions makes the deposit of the petroleum revenue mandatory,” she stressed.

She further maintained that PIAC’s position is grounded in the legal status of GNPC itself as a public commercial entity owned by the state.

“To all intents and purposes, GNPC is a public commercial company owned by the Government of Ghana,” she said, citing provisions of the GNPC Act and the Companies Act.

According to her, GNPC’s core mandate includes ensuring that the Republic derives the greatest possible benefit from the development of its petroleum resources, while the Corporation is also empowered under the law to establish subsidiary and affiliate companies to carry out its operations.

However, she argued that such subsidiaries cannot be treated as legally detached from GNPC where the state retains controlling interest.

“Any subsidiary of GNPC cannot be said to be distinct from GNPC, since GNPC is owned by the Government and people of Ghana as a public company.

“It follows then that so long as GNPC has a controlling interest in its subsidiary companies, the said companies cannot be distinct from GNPC and are therefore liable to pay petroleum revenue funds into the Petroleum Holding Account,” she said.

Resource governance experts say the dispute raises broader concerns about transparency and accountability within the country’s petroleum revenue architecture.

The Policy Lead for Petroleum and Conventional Energy at the Africa Centre for Energy Policy (ACEP), Kodzo Yaotse, said ACEP’s position on the matter has consistently been that petroleum revenues, regardless of the entity earning them, must be paid into the Petroleum Holding Fund.

“We have always maintained that petroleum revenue is petroleum revenue irrespective of who is earning it and should be paid into the PHF,” he said in an interview with the B&FT.

Mr. Yaotse argued that the PRMA was designed to ensure visibility over the collection and utilisation of petroleum revenues, warning that allowing entities to operate outside the framework undermines the intent of the law.

“If some entities can elect not to make the collection and expenditure of revenues visible to the architecture of the PRMA, such actions undermine the essence of the law,” he said.

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