Ghana has won an international arbitration case against oil producer Tullow Ghana Limited over the taxation of business interruption insurance proceeds, with the tribunal dismissing all of Tullow’s claims and upholding a tax assessment of US$393,091,993.70.
The Ministry of Finance said the arbitral tribunal, constituted under the Rules of Arbitration of the International Chamber of Commerce (ICC), delivered its award on Tuesday in proceedings brought by Tullow against the Republic of Ghana.
According to the Ministry, the tribunal ruled in favour of Ghana and found that the tax assessment by the Ghana Revenue Authority (GRA) did not breach the applicable Petroleum Agreements.
It also determined that the penalty imposed was properly applied, the assessment was not time-barred and the GRA’s enforcement action was lawful.
Finance Minister Dr. Cassiel Ato Forson commended the Office of the Attorney-General, the GRA and Ghana’s external legal counsel, Foley Hoag LLP, for defending the interests of the Republic.
He said the outcome reaffirmed Ghana’s position that companies operating in the country, regardless of their size, are subject to Ghanaian laws.
The government said the ruling comes at a significant time as Ghana and its partners in the Jubilee and TEN oil fields work to maximise the prospects of the two fields.
The Ministry disclosed that, before the tribunal’s decision, the government had been engaged in discussions with Tullow to resolve outstanding tax matters amicably.
Those discussions, it said, will continue and will cover both the matter determined by the tribunal and separate proceedings concerning the disallowance of loan interest.
Despite the dispute, the government described Tullow as a “vital partner” and Ghana’s largest petroleum producer, noting that its operations in the Jubilee and TEN fields contribute to the country’s energy security, domestic gas supply and the livelihoods of thousands of Ghanaians.
The government said it would work closely with Tullow to give effect to the tribunal’s award in accordance with Ghanaian law, while taking into account the continuity of operations in the Jubilee and TEN fields and Tullow’s capacity to sustain the investments required in those assets.
It added that Ghanaian law gives the GRA authority to determine the timing and manner in which assessed tax liabilities are settled.
The government said its implementation of the award would seek to secure revenues due to the Ghanaian people while allowing Tullow to continue operating and investing in Ghana as a going concern.
