Govt reviews petroleum income tax, production laws

Spread, September 20/2008

Story: Charles Benoni Okine

THE government has begun a comprehensive review of the petroleum income tax and production laws to bring them in tandem with the expected changes in the industry following the oil find.
The Vice-President, Alhaji Aliu Mahama, made the announcement at the Presidential Luncheon of the Institute of Chartered Accountants (ICA) in Accra yesterday.
The event, on the theme, “Discovery of oil: The benefits, opportunities and challenges”, was attended by high-profile chartered accountants and policy makers in taxation, among others.
Alhaji Mahama said the government had also set up a body to come up with a national policy on the management of the oil revenue when production started.
Consequently, he tasked professionals in that area to forward their inputs to the appropriate quarters to make the laws suit Ghanaian conditions.
He said “the government is not complacent with the recent oil find”, adding that “efforts are still underway by other companies, at the instance of the government, to search for hydrocarbons in other areas offshore Ghana to help increase hydrocarbon reserves”.
Alhaji Mahama said while the government would derive substantial benefits from royalties, carried interest, petroleum taxes, annual surface rental, among others, it was also expected that the buoyancy of the petroleum industry would lead to the utilisation of skilled and semi-skilled personnel in geology, geophysics and oil rigging which would go a long way to enhance job creation in the country.
Against that background, he said, “We must, therefore, as a nation, start training and developing our human resource base to effectively participate in the exploration and management of the emerging petroleum industry.”
He said for a start, there was the need for technology transfer from those experienced partners to the local technical personnel to enable them to cope with the challenges of the oil industry.
Alhaji Mahama also challenged the universities and other institutions of higher learning to design relevant courses and programmes to provide the needed knowledge, skills and technical personnel to support the emerging petroleum industry.
“The oil discovery is a good thing for Ghana. Every Ghanaian, including you professionals gathered here, is expected to play his or her role to enable the nation to optimise these oil and gas discoveries,” he said.
The Vice-President reminded all that the nation was duty bound to ensure that the find became a blessing for the nation, this generation and those yet to come.
In a keynote address, a partner of Deloitte, West and Central Africa, and expert in the oil industry in Nigeria, Mr Babatunde Oremade, dealt with the benefits, opportunities and challenges of the oil , saying that oil was a potential principal revenue earner for the country.
He said there was also the opportunity for the country to prosper in many fields and to make society more prosperous.
Mr Oremade, however, warned that through excitement about the find, economic, environmental, the security of the nation and other major challenges could make it a curse and not a blessing.
He said while the country celebrated the find, it was imperative for it to start the process with the end in mind, adding that “the time to put the checks in place is now”.
The acting Commissioner of the Commission on Human Rights and Administrative Justice (CHRAJ), Ms Anna Bossman, said the find should be managed with a lot of tact, with lessons drawn from the mistakes of countries which had not been able to make the resource a blessing.
She said the whole process to ensuring that Ghana derived maximum benefits from the find was to ensure that priorities were put in place to avoid over expenditure in areas that were not necessary for the development of the country.
The President of the ICA, Mrs Cecilia Nyann, in her welcoming address, challenged members of the association to brace themselves by expanding their knowledge to encompass the sector so that they would be able to contribute their quota to ensure that Ghana benefited fully from the find.
“We are bound to compete fiercely with our foreign counterparts with expertise in the oil sector and unless we keep ourselves abreast of the industry, we may be overtaken by events,” she added.