Vivo Energy, owner of Shells former downstream operations in Ghana, is striving to regain its license to operate there after losing it for failure to meet a local ownership requirement.
Amsterdam-based Vivo, which is still operating in Ghana, said it still intends to comply with a stipulation by Ghanas National Petroleum Authority that it sell 8 percent of the stock in its Ghanaian business to raise the percent owned by local investors to 25 percent. But Kwaku Kwateng, a parliament member representing Obuasi West constituency, argues that the NPA should stick to an earlier decision not to renew Vivos license to operate.
Kwatengs contention was based on one of the requirements for the approval of Vivos takeover of Shells downstream operations in Ghana, in August 2013: That it will scale up indigenous holding in the company to 25 percent by transferring 8 percent equity to local investors.
The transfer of 8 percent equity to local investors, according to an online article published by Ghanaian news group Graphic, was a precondition to granting and subsequent renewal of Vivos license.
In a Dec. 18 press statement, Vivo confirmed it accepted the requirement for its operation in Ghana.
Although there is no legal requirement for the majority shareholder to cede 8 percent of its shareholding to local participants, Vivo Energy agreed, as a responsible foreign investor, to divest the 8 percent shares to achieve the 25 percent Ghanaian equity in the company. Vivo Energy is currently in discussions with local entities who have expressed interest in acquiring the 8 percent shares, it said.
Throughout this period, Vivo Energy Ghana Ltd. has attended regular meetings with the NPA and kept the NPA fully informed of the proposed divestment process and timetable. Furthermore, Vivo Energy Ghana Ltd. has at all times cooperated with the NPA and has complied with the process agreed with the NPA.
Vivo did not respond to multiple requests for comment from Lube Report.
Despite assurances by Vivo, more than a year after it commenced operation in Ghana it has yet to cede 8 percent of its shareholding to local investors. The non-compliance with this proviso, Graphics article reported, compelled the NPA to turn down Vivo Energy’s license renewal bid on Oct. 27.
While the NPA Act does not specify any minimum Ghanaian shareholding requirement for qualification for a license or its renewal, one provision states that a license granted by the NPAs board is subjected to the conditions specified in the license.
Kwateng said, Vivo Energys refusal to satisfy the conditions make their continued operations in Ghana illegal.
However, stakeholders in the Ghana lubricant sector said they have no complaints about Vivo.
It was a minor problem, Dan Nunoo, managing director of Finexx Energy, told Lube Report. They went according to the laws of Ghana and are doing business legitimately.
Nunoo said indigenous players in the lubricant sector are not threatened by the entry of Vivo into Ghanas lubricant market.
Amos Donkor, managing director of Tema Lube Oil Co., said it is not correct to say that Vivo is operating illegally in Ghana because they are representatives of Shell in Ghana. They are registered to distribute Shell products, and they are duly registered to operate in Ghana, Donkor told Lube Report.
Vivo is a joint venture between Vitol, Helios Investment Partners and Shell. Vitol and Helios each own 40 percent of the company, Shell the remaining 20 percent. Vivo owns Shells former downstream operations in 16 African nations.