Persistent defaults by International Oil Companies (IOCs) to pay surface rental fees on time is eroding petroleum revenues and exposing weaknesses in enforcement of the country’s upstream fiscal regime.
In view of this, the Auditor-General has directed the Petroleum Commission (PC) and Ghana Revenue Authority (GRA) to impose statutory penalties on defaulting IOCs.
Findings in the Auditor-General’s report on management of petroleum funds for the period January 1 to December 31, 2024 show that several operators delayed or defaulted on mandatory surface rental payments into the Petroleum Holding Fund (PHF) – despite clear legal timelines and penalty provisions under petroleum revenue laws.
Regulation 5 of the Petroleum Revenue Management Regulations, 2019 (L.I. 2381), says operators are required to self-assess surface rentals annually and pay amounts due into the PHF by February 28 of each year.
Non-compliance with these requirements undermines predictability in petroleum revenue flows and weakens fiscal planning.
The law provides for sanctions in cases of default. Section 3 of the Petroleum Revenue Management Act, 2011 (Act 815) stipulates that entities that fail to meet payment deadlines must pay a five percent penalty of the original amount for each day of default, or any higher rate prescribed under other applicable laws.
However, the report observed that these penalties have largely gone unenforced – reducing the law’s intended deterrent effect.
Based on these, the Auditor-General has charged the upstream regulator and country’s tax authority to move beyond administrative oversight and actively enforce penalties against defaulting companies to safeguard state revenues.
The Petroleum Commission and GRA must intensify recovery efforts as a matter of course and ensure that all companies liable for surface rental payments comply with statutory timelines.
Continued non-enforcement risks normalising late payment behaviour and weakening fiscal discipline in the upstream sector.
The Auditor-General further suggested that GRA should consider requiring bank guarantees from prospective oil companies as a risk-mitigation measure, particularly given what it described as a growing pattern of default, debt accumulation and abscondment among operators.
thebftonline
