Expert warns against lack of oil industry monitoring

THE Africa Centre for Energy Policy (ACEP), an independent energy think-tank, warned Ghana risked losing huge oil tax revenues if it persisted awarding contracts to companies without proper checks.

It is mandatory for all oil companies to disclose their beneficial owners before they are given contracts, and then hire independent auditors to verify the tax liabilities of the companies.

However, Executive Director of ACEP, Mohammed Amin Adam, noted that most of the companies operating in the country’s oil industry were registered in “tax- havens.”

“Tullow Oil is incorporated in the British island called Jersey, a tax- haven that has just been blacklisted by France in a move to impose heavy penalties on thousands of French individuals and businesses.

“Kosmos Energy and Anadarko Petroleum are incorporated in the Cayman Islands, another tax-haven. Government has also just recently approved a petroleum agreement in respect to the South Deep Water Tano oil block with AGM Petroleum Ghana, a company fully owned by AGM Gibraltar – another tax-haven,” said Adam.

He said the Petroleum Income Tax law allowed any company that finances its project by debt financing to deduct the interest at cost, which means that the higher the interest the higher the cost – and the lower the revenue that would come to the state citing revenues that were shared after costs have been deducted.

“So companies registered in secrecy jurisdictions will finance their operations and the interest that is deducted goes back to the same company, and so it is the same company that is circulating revenues around at the expense of the state,” Adam said.

On assessing the tax- liability of oil companies, Amin said the country could not rely solely on companies for that information, since the companies were not always transport.

Source: http://itnewsghana.com

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