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Business News of Tuesday, 25 February 2020


Energy Ministry tackles Mould on Aker, AGM misinformation

Minister of Energy, John Peter Amewu Minister of Energy, John Peter Amewu

The Energy Ministry has criticised the former Chief Executive Officer of GNPC, Alex Mould, over his "misinformed comments" regarding incentives given to Aker Energy and AGM Petroleum Agreements by the government.

In a statement, the Ministry said the amendments to the Petroleum Agreements of Aker Energy and AGM were to provide regulator certainty and incentives to support the realisation of Aker Energy’s Pecan Project and increase investment in the AGM block, respectively.

These investments, it said, have already yielded positive results for the country as AGM recently announced crude oil discoveries following an accelerated drilling campaign.

Providing incentives, it pointed out, will increase oil production, provide job opportunities and add value to the economy.

Continuing, the Energy Ministry said, first of all, “Mr Mould claims that the PA Amendments compels government to accept FPSO as the development technology. This is factually wrong. It only stabilises the framework for evaluating and FPSO so contractor can rest assured that any FPSOs being evaluated will be subject to the current evaluation criteria. Further, Mr Mould should know that the FPSO is the most realistic development option at these water depths.”

Secondly, “Mr Mould claims that the PA amendments allow Aker Energy to change PoD one year after FID. He fails to mention that this is only allowed if costs are not increased.”

Thirdly, on the issue that Aker and AGM will be exempted from import duty, VAT and all sorts of other taxes, it said: “That demonstrates a lack of appreciation of the fiscal stabilisation provisions specified in the original Petroleum Agreement”.

Additionally, the Petroleum Agreement specifies the type and number of taxes the contractor shall be required to pay.

The statement outlined further that in Article 12.1, the Petroleum Act provides: No tax, duty, fee or other impost shall be imposed by the state or any political sub-division of the state on contractor, its sub-contractors or its affiliates in respect of activities related to petroleum operations and to the sale and export of petroleum other than those provided in this article.

The statement emphasised that the withholding tax of rate of AGM, which Mr Mould described as zero, is factually inaccurate and, thus, it is 5% as stated in the PA amendment.

Regulations 40A (2) states: ‘Where the Joint Management Committee grants an initial approval under sub-regulation (1), the contractor shall submit the approved annual work program and budget to the commission for a final approval.’

The statement pointed out that it is curious, therefore, where Mr Mould got his idea about “unfettered discretion”.

“It is important to state that in the amendments of the AGM Petroleum Agreement, we negotiated a higher net gain for Ghana. We reduced our commercial paid interest and subsequent exposure of GNPC but raised the free carried interest of the state.”

The Energy Ministry concluded by advising Mr Mould and others who conduct themselves in similar ways to contact the appropriate institutions when they lack information on any issue in the oil and gas sector, adding that as a former CEO of GNPC, he cannot rely on uninformed commentators for information on critical matters like petroleum.