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Business News of Wednesday, 6 June 2018

Source: Myjoyonline.com

Bulk-oil distributors demand forensic audit into unreported GHC915m ESLA receipts

The Chamber of Bulk Oil Distributors (CBOD) wants a special probe into a GHS 915 million unreported ESLA receipts for 2016 and 2017 that is fast becoming controversial.

CBOD is also asking the government publish all exemptions granted under the ESLA receipts for the two periods.

These demands by the bulk oil distributors follow ESLA Plc’s disagreement figures quoted in the 2017 Industry Report compiled by CBOD.

ESLA Plc is a special purpose public company established to raise bonds to clear a GHS10billion energy sector debt through shares trading.

In the 2017 Industry Report, CBOD highlighted disparities between its figures for funds received into the ESLA coffers and those the Finance Ministry reported for 2016 and 2017.

CBOD said, its analysis of the National Petroleum Authority’s data on the performance of oil marketing companies shows that government failed to account for GH¢576.63million for 2016 and GH¢339.16million for 2017 of ESLA receipts.

The Chamber said the disparities between its figures and the Finance Ministry is the result of transfer pricing, dumping of products meant for export on the local market, and smuggling.

However, in response to the unreported receipts highlighted in the 2017 Industry Report, ESLA Plc stated that “whiles these amounts may have been derived by taking the gross volumes of petroleum products consumed into consideration, a pertinent factor relating to exemptions that have been granted for certain volumes lifted were ignored.”

The bulk oil distributors do not seem to think the explanation from ESLA Plc is plausible.

“The CBOD is unaware of any exemptions granted any industry outside of the E.S.L.A. Act and does not deny the possibility of same,” statement released by its CEO, Senyo Hosi, said.

But he states further, “We request that all exemptions granted be made public. To suggest that over GHS915mn (2016 and 2017) of unreported E.S.L.A. receipts are due to exemptions is serious and must be a subject of public interest. GHS915.79mn is equivalent to 14.2% of the total E.S.L.A. receipts collected between 2016 and 2017.”

Rooted in law

CBOD says its computations of expected ESLA receipts for 2016 and 2017 are based on the National Petroleum Authority (NPA) verified Oil Marketing Companies (OMC) performance data

“OMCs are payers of ESLA taxes and their volumes form the basis for the E.S.L.A. tax payable. The ESLA taxes chargeable and the products to which they are charged are defined by the ESLA Act 2015 (Act 899) as amended (E.S.L.A. Act). The NPA, as the regulator, advises industry on products to which the E.S.L.A. taxes should be charged as well as the applicable rates,” the CBOD stated in defence of its claims.

Read below key sections of the CBOD statement released on Tuesday, June 5, 2016.

-The formation of E.S.L.A. Plc. and the issuance of the energy bonds are a function of recommendations made by the CBOD and the Ghana Association of Bankers as far back as October 2015. We envisaged that for E.S.L.A. Plc. to be viable as an SPV, it ought to operate independent of political interference. We humbly urge E.S.L.A. Plc. to maintain the integrity of the energy bond programme by focusing on its mandate. Our concern stems from point 5, that E.S.L.A. Plc. is beginning to tamper with its integrity. We urge its administrators to be cautious.

-E.S.L.A. Plc. is neither the collector/reporter of E.S.L.A. receipts nor the mouthpiece for government agencies from 2016 to date. We do not find it in E.S.L.A. Plc.'s place to speak to revenue leakages in respect of smuggling, export dumping and transfer pricing.

-As a responsible entity, CBOD has raised issues of concern and recommended an independent public enquiry as well as a forensic audit of the E.S.L.A. receipts for 2016 and 2017 to ensure that Ghana has not been short-changed by petroleum service providers and/or corrupt officials in the various government agencies. Such an audit will reconcile volumes procured by BDCs, movements from depots, OMC liftings, GRA reports as well as exemptions. In respect of exemptions, the forensic audit will be expected to ascertain whether the volumes were really used for their purpose.

-For example, if a power producer claims exemption on 1million litres, the audit will have to ascertain if the power produced for the period aligns with the reported consumption of 1million litres. It is imperative to ascertain whether the exemptions have not found their way back into the regular trade. We will be most pleased if it is proven beyond reasonable doubt that there are no such breaches.

-As an industry body we endeavour to report on industry in a very objective manner supported by deep policy analysis for the growth of industry and the good of Mother Ghana. It is in no way our aim to jeopardise confidence in the energy bonds. We rather wish to awaken responsibility on the part of all to further deepen confidence. It should be noted that our membership are also holders of the E.S.L.A. Plc.bonds which we consider our 'brainchild' and will do our utmost to ensure it succeeds.