Business News of Saturday, 20 October 2018
The Petroleum Commission of Ghana has cautioned all businesses that engage in fronting to desist from the practice or face the law.
The Commission has stated that it will not renew the license of any Joint Venture which fails to fully disclose the identities of its shareholders.
The CEO of the Petroleum Commission, Egbert Faibille Junior believes the clampdown should reduce corruption within the petroleum sector.
The need to stop the practice of fronting has also been revived following the launch of the bidding rounds for oil blocks.
Egbert Faibille explains that from next year , the regulator will not renew the license of any Joint Venture which is complicit of fronting.
“What the Petroleum Commission has done is that in the last year, we have created a monitoring and evaluation department and they have been out to the field where we have seen the companies where on paper, you see that this is a JV company but the indigenous Ghanaian company does not even have presence in the company,” he said.
Mr. Faibille added, “We have told them that when they come for renewal of their JVs, we will not renew them. So those JVs that are fronts, are going to be de-registered on the books of the Petroleum Commission beginning January 2019.”
Fronting usually occurs where a local company acts as a subsidiary of foreign company in order to enjoy some benefits such as tax exemptions.
The issue has dominated concerns by the industry regulators as it weakens the purpose of encouraging local participation in the oil and gas sector.
Deputy Minister of Energy, Mohammed Amin Adam further explains that the newly introduced General Petroleum regulations should facilitate attempts to stop fronting.
According to him, the disclosure of beneficial owners in all petroleum agreements will enhance transparency to the latter.
“In addition to publishing all the petroleum agreements, the regulation requires that the owners, that is, the people who are going to benefit from that contract on the contractor side, must also be published. So even if there is fronting and the PC does not detect it, once the agreement is signed and the owners published, then the necessary investigations can be conducted by interested parties like journalists,” he observed.
Six oil bocks are now available for investors to bid for them and subsequently explore for commercial quantities of oil.
The process commenced last Monday and it is expected to be completed August next year.
This should improve Ghana’s oil production and increase revenue.