Mar(k): Travel, Hiking, and "Doing Good"

musings on our life of travel and volunteering

Ghana’s Oil Discovery: Haste Makes Waste

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By Mark Shircore

(Story published in March 2010 edition of The ADVOCATE)

Work on Ghana’s first oil discovery, the giant Jubilee field, continues on schedule, with production due to commence in the last quarter of 2010.  With less than a year before the oil (and government revenue) starts to flow, you would think that all the necessary regulatory and legal systems would be in place. Unfortunately this is not the case, raising concerns that funds accruing from Ghana’s oil will be mismanaged, or worse still, misappropriated.

However, all is not necessarily quiet. There certainly seems to be a lot of action in the Attorney General’s office preparing a legal case against the two principals of the EO group, the Ghanaian company who have a 1.75% stake in the Jubilee development. These individuals, who were close to the Kuofor government, have allegedly been engaged in corrupt practices ranging from securing a “sweetheart deal” which will cost the Ghanaian people hundreds of millions of cedis in lost revenue, to forging documents and failing to hold company meetings. And the Ghana National Petroleum Corporation seems to be very busy courting foreign companies to partner them in their bid to acquire Kosmos Energy’s 23.5% share of Jubilee for around $4 billion US dollars.

But where is the legislation that will control the activities of the oil producers and regulate the influx of funds into government coffers? According to reports, a Petroleum Bill has been drafted and is currently under review by the Attorney General’s office. Under this Bill, a Petroleum Regulatory Authority will be established to control the activities of the oil industry. The Bill will reportedly also addresses local content issues, with the objective of ensuring that 90 percent of the goods and services required by the oil industry are sourced locally by 2020.

With relatively little time remaining before oil starts flowing, civil society groups and interested parties are understandably worried that the Petroleum Bill will be rushed through Parliament with insufficient scrutiny.  An overriding concern of these groups is that the management of Ghana’s oil finds is conducted in a truly transparent manner, to ensure that the problems befalling so many of Africa’s oil producing countries, are not experienced in Ghana. Nigeria’s squandered oil wealth and environmental destruction is a tragedy which should certainly not be repeated.

According to a report by Oxfam, Ghana’s challenge will be to ensure the right institutions and transparent policies are in place before oil production starts. “Ghana needs to be careful to control the pace of the development of the petroleum sector so as to not let commercial developments outstrip the capacity of the government and society as a whole to meet the myriad challenges. In many ways, speed is not Ghana’s friend. Ghana should set its own timetable for the further development of the petroleum sector. By moving quickly, mistakes can be made that could decrease Ghana’s “take” from the sector and undermine accountable management of the resource.”

The impending court case against the EO group and the machinations of GNPC do not inspire confidence that the management of the oil industry has been handled well to date. As the Oxfam report observes: “Oil wealth tends to erode democratic accountability.” Our challenge is to ensure this does not happen in Ghana!

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Written by Mar(k)

March 19, 2010 at 12:29 pm

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