The Ministry of Finance and the Multi-Stakeholder Group (MSG) of the Ghana Extractive Industries Transparency Initiative (GHEITI) Wednesday launched the country’s 2017/18 Mining and Oil/Gas EITI reports.
The MSG is a tripartite body made up of government, industry and civil society, with the responsibility of steering the affairs of Ghana’s Extractive Industries Transparency Initiative (EITI).
The mining report brings to fourteen (14), the total number published since Ghana acceded to the initiative in 2003. For oil and gas, the 2017/18 report is the seventh (7th) since the initiative was expanded to cover the sector.
The reports which were published in conformity with the 2016 EITI Standard, go beyond the mere reconciliation of payments and receipts, to include contextual information such as the summary description of the legal framework and fiscal regime, the sector’s contribution to the economy, production and export data, state participation in the extractive industries, revenue allocations, sustainability of revenues, licence registers and licence allocations.
Commenting on the 2017/18 reports ahead of the launch, the Chief Director of the Ministry of Finance, Patrick Nomo, who also doubles as the Chair of GHEITI said: “The reports this time around provide better context, with up-to-date information on developments within
the two sectors, which in my view will help address Ghana’s two outstanding validation corrective actions, and lead to a more informed debate on what contributions the extractive sector is making to our nation’s development.”
He added that “the reports highlight issues regarding what policy reforms are necessary to address challenges faced by both government and industry so that the extractive enterprise becomes a win-win venture for both resource owner and investors”.
On his part, the Co-Chair of Ghana’s EITI, Dr Steve Manteaw, stated that “While disclosures on the management and use of extractive resources are vital in fostering an informed citizens’ engagement on natural resource governance, the country’s long term objective of enhancing the development outcomes of the extractive sector will not be served if citizens do not seize upon the reports to demand accountability and the needed policy and practice change from duty bearers.”
He challenged all Ghanaians to take keen interest in the reports and to use its findings and recommendations in their policy engagements.
The Oil and Gas companies that participated in the 2017/18 reconciliation exercise were: Ghana National Petroleum Corporation (GNPC), Tullow Ghana Ltd, Kosmos Energy Ghana, Petro SA Ghana Ltd, Eni Ghana (E&P) Ltd, Hess Ghana Ltd.
Companies such as Anadarko, Eco Atlantic, Vitol Upstream, and AGM though met the materiality threshold for inclusion in the report, failed to submit their templates, and therefore did not participate in the exercise.
A few companies were excluded from the reconciliation exercise because they did not meet the materiality threshold of $370,000 and $350,000 for 2017 and 2018 financial years respectively, during the scoping phase of the exercise.
On the government side, reporting entities whose data were reconciled with those of the companies were: Ghana Revenue Authority (GRA), GNPC, Ministry of Finance / Bank of
Ghana, Petroleum Commission and Ministry of Energy.
For the mining reconciliation report, sixteen (16) companies – made up of 14 gold mining, 1 bauxite and 1 manganese were covered by the exercise.
The materiality threshold or cut-off point for the mining sector reporting companies for the 2017/18 reports was GH¢2 million.
State agencies which provided data and information for the mining audit were: GRA, Office of the Administrator of Stool Land (OASL), Minerals Commission, Municipal and District Assemblies within areas of operation of the mines, Ministry of Lands and Natural Resources, and Ministry of Finance.
Key findings – Oil and Gas
Further, GNPC’s financial statements do not reflect debts owed by GNGC.
GNPC has still not been repaid by the Ministry. On 15th December 2018, GNPC received a letter from the Ministry directing that the $50m loan be expunged from its books, on the grounds that per the Earmarked Funds Capping and Realignment Act,
2017 (Act 947), the Minister for Finance is empowered to cap all earmarked funds at twenty-five per cent of tax revenues.
Key findings – Mining
The law which was instituted to obtain some revenue from the ASM sector has been dormant following protests by ASM sector players against the mode of collection and the quantum of the amount to be paid.
This is likely to reduce the potential impact of the Fund on mining communities. The Act also stipulates that Budget Statement would assign weightings by the Minister in the event of aligning but these weightings were absent in the 2018 and 2019 budget statements, on occasions when allocations to the MDF were in a shortfall in 2017.
For example, in the event of gold price reaching $1,750 Goldfields would pay royalties at 4.0%, AngloGold Ashanti would pay at 4.5% whilst others would pay 5%. The reasons for the variations ought to be established for the purposes of transparency and fairness.