Among the numerous challenges in Ghana’s oil and gas sector, there is a fresh concern about how the country is losing some tax revenues it deserves from the sector.
The 2023 Ghana Extractive Industries Transparency Initiative (GHEITI) Oil and Gas Report, cited by The High Street Journal, has revealed that the Ghana National Petroleum Corporation (GNPC) and its subsidiary, Explorco, have not paid corporate income tax on revenues from their 7 percent interest in the Jubilee and TEN oil fields since 2021.
This development, the report explains, stems largely from the failure to properly apply ring-fencing rules. To put it simply, ring-fencing simply means separating the finances of different projects so profits from one cannot be used to offset losses from another, especially for tax purposes.
When this rule is not followed, it becomes difficult for the state to accurately assess and collect taxes due.
In practical terms, this means Ghana has been missing out on significant public revenue at a time when the country has struggled with debt, high living costs, and limited fiscal space.
Corporate income tax from oil production is meant to support government spending on essential services such as roads, schools, healthcare, and social protection. When such taxes are not paid, ordinary citizens ultimately bear the cost.
GHEITI indicates that GNPC and Explorco’s non-payment is not just a technical issue but a structural weakness in how state participation in the petroleum sector is managed.
As state-owned entities, GNPC and Explorco are expected to set the standard for transparency, compliance, and accountability. Their failure to meet tax obligations raises uncomfortable questions about fairness, especially when private companies are required to fully comply with tax laws.
“More critically, structural weaknesses emerged around state participation and institutional clarity. GNPC and its subsidiary Explorco have not paid corporate income tax on revenues from their 7% interest in Jubilee and TEN since 2021, largely due to non-adherence to ring-fencing provisions, resulting in foregone public revenues,” the report revealed.
But this is not the only issue GHEITI identified. Beyond lost revenue, GHEITI also mentioned other deeper institutional problems. The report notes that the unresolved overlap between GNPC and Ghana Gas over who should act as the national gas aggregator continues to create confusion.
Experts and analysts explain that this lack of clarity increases regulatory uncertainty and makes investors nervous, potentially slowing down future investments in the sector. These issues weaken confidence in Ghana’s oil and gas governance framework.
The report noted, “In another breath, unresolved overlap between GNPC and Ghana Gas over the national gas aggregator role continues to create regulatory uncertainty and investor risk.”
Interestingly, these worrying findings are coming at a sensitive time, a time that Ghana seeks to maximize benefits from its natural resources while rebuilding economic stability.
Already, civil society groups are pushing for a total overhaul of the country’s natural resource governance framework. Given the aim of the current government to maximize the country’s natural resource benefits, fixing these gaps is not optional.
Ensuring GNPC and its subsidiaries pay the right taxes, just like any other operator, is critical for restoring trust and protecting public interest.
