Ministry of Energy should not Approve Anadarko–Total SA Deal until All Owed Taxes are Paid

Revenue Mobilisation – Africa (RM-Africa) is concerned about the many speculative news stories about the sale of Anadarko operations in Ghana to Total SA. We find the situation to be disturbing because we expect the Ministry of Energy to be fully transparent and voluntarily share with citizens, information of such significant interest to the public. The Anadarko deal with Total SA deserves high national attention and priotisation because at stake is about 24% of the Jubilee Oil Field and 17% of the Tweneboah-EnyeraNtomme (TEN) project. Anonymous officials within the Ministry of Finance and the Ghana Revenue Authority estimated that gains from Anadarko’s operations in the Jubilee Field and the TEN project before the sale, amounted to about $4.4 billion; and that gains to Anadarko from the Sale to Total SA is about $2.5 billion. We note, that the potential revenue from the transaction to the country will be great whilst any effort to aid or abet evasion will be grave for the revenue needs of the country. Before the public receives full briefing and information on the transaction a member of the ruling party and a former deputy minister
of energy has put out what he considers to be a conservative amount owed to the country by Anadarko – a
whopping $500 million.

The threat of Illicit Financial Flows to African Economies

The World Bank acknowledges that IFFs pose a huge challenge to the political and economic security of developing countries. They note that, among others, corruption, fraud in international trade and tax evasion are harmful to poor countries as they divert money from public priorities. Transnational corporations operating in Africa and other parts of the developing world do everything in their power, through very creative skirting around of tax laws of host countries to pay as little tax as possible for bigger profits. IFFs result from deliberate attempts to avoid tax obligations by companies, sometimes with the connivance of persons with the responsibility to protect the interest of the state through schemes such as mis-invoicing, manipulation of prices of transactions and abuse of tax exemptions regimes. IFFs are estimated to cost between USD 60 billion to 1 trillion annually to African economies, up from USD 20 billion in 2001. This is about three to ten times the official development assistance to the continent.

Procedural Breach and Potential Financial Loss

Information from the Ministry of Energy that was presented by the current Deputy Minister of Energy indicates that Anadarko petroleum has met majority of the requirements that will guarantee their sale transaction with only tax clearance outstanding. Sardonically as we probed further, reliable information indicates that Anadarko Petroleum has already sold its assets in Ghana to Total SA at an amount of 2.5 million dollars in 2019. The sale has clearly preceded the laid down process of acquiring approval from the Ministry of Energy. Aside from the procedural breach there is a higher risk of financial loss to Ghana, and this is highly possible than impossible as it stands. While the ministry awaits information on tax clearance obligations of Anadarko from the Ghana Revenue Authority (GRA) before it possibly grants permission for any sale (transfer of ownership), Anadarko has completed the sale of its assets to Total SA, a move which the deputy Minister was adequately informed about and ironically expressed hope that Total SA operating in Ghana will bring a significant boost to our oil and gas industry.

Our expectations of Government

Based on the foregoing issues raised, we demand that the Ministry of Energy;

1. Refrains from any planned approval of the Anadarko-Total SA deal and work with the GRA to acquire and share a status report on the current tax situation of Anadarko and to ensure that all taxes owed the country are fully recovered ahead of approving the sale and take-over of assets of Anadarko by Total SA to avoid the occasion of financial loss to the country.
2. Should make public, all the requirements expected of Anadarko to qualify for approval of the Anadarko-Total Transaction to ensure full transparency on this matter.
3. Commits to actively contribute to the fight against Illicit Financial Flows in the country through vigilance and awareness of the different schemes through which Transnational Corporations seek to increase their profits to the detriment of their host countries.

RM-Africa

Revenue Mobilization Africa is a not-for-profit organization working to ensure effective revenue mobilization and efficient application of tax resources in Africa. RMA works with local and international partners to undertake research and embark on evidence and rights-based advocacy to influence policies and change practices that directly affect the domestic revenue mobilization initiatives in Africa. Our work focuses on improving tax compliance, humanizing tax collection processes and promoting transparency and efficiency in the application of tax resources.

GEOFFREY KABUTEY OCANSEY
(EXECUTIVE DIRECTOR)