Ghana Wins $393 Million Tullow Tax Arbitration as Tribunal Upholds GRA Assessment

Ghana has secured a major victory in its tax dispute with oil producer Tullow Ghana Limited after an international arbitration tribunal ruled in favour of the Republic.

The decision, announced by the Ministry of Finance, followed proceedings brought by Tullow under the rules of arbitration of the International Chamber of Commerce (ICC) concerning the taxation of business interruption insurance proceeds.

According to the Ministry, the Tribunal dismissed all claims brought by Tullow and upheld in full the Ghana Revenue Authority’s (GRA) tax assessment of US$393,091,993.70.

The Tribunal further determined that the tax assessment did not breach Ghana’s Petroleum Agreements with Tullow. It also found that the penalty imposed was properly applied, the assessment was not time-barred and the GRA’s enforcement action was lawful.

Government welcomes arbitration outcome

The Minister for Finance, Dr Cassiel Ato Forson, MP, commended the Office of the Attorney-General, the Ghana Revenue Authority and Ghana’s external legal counsel, Foley Hoag LLP, for their work in defending the interests of the Republic.

The Minister said the ruling reinforces Ghana’s position that all companies operating in the country, regardless of their size, are subject to the laws of Ghana.

The government also indicated that the ruling comes at an important time as Ghana and the Jubilee partners work to maximise the prospects of the Jubilee and TEN oil fields.

Ghana and Tullow to continue discussions

Despite the Tribunal’s decision, the government said it remains committed to engaging Tullow to resolve outstanding tax matters amicably.

The Ministry explained that discussions between the government and Tullow had already been underway before the arbitration award. These discussions will continue to cover the matter determined by the Tribunal as well as separate proceedings concerning the disallowance of loan interest.

The government said it expects the outstanding issues to be resolved in the mutual interest of both parties.

Tullow remains important to Ghana's oil sector

The Ministry of Finance acknowledged Tullow as a vital partner in Ghana’s petroleum industry and the country’s largest petroleum producer.

According to the statement, Tullow’s operations in the Jubilee and TEN fields contribute to Ghana’s energy security, domestic gas supply and thousands of Ghanaian livelihoods.

The government therefore stressed that it is in the national interest for the relationship between Ghana and Tullow to continue.

The government said it will work closely with Tullow to give effect to the arbitration award in accordance with Ghanaian law, while taking into consideration the continuity of operations in the Jubilee and TEN fields and Tullow’s capacity to sustain the investments required in those fields.

Protecting Ghana's tax revenues

The Ministry further emphasised that Ghanaian law gives the GRA the authority to determine the timing and manner in which assessed tax liabilities are paid.

The government said implementation of the award will seek to secure revenues due to the Ghanaian people while preserving Tullow’s ability to continue operating and investing in Ghana as a going concern.

The latest ruling adds to a series of tax disputes between Ghana and Tullow that have been subject to international arbitration. Tullow has previously disclosed separate disputes involving tax assessments relating to its Ghana operations. (investegate.co.uk)