Business News of 2014-07-20

Gov’t urged to facilitate comprehensive governance reforms in oil contracts

Africa Centre for Energy Policy (ACEP), an energy-policy think-tank, has entreated government to facilitate more comprehensive governance reforms pertaining to oil contracts if the country is to be a model of good petroleum resource management.

It adds that government should demonstrate good faith beyond the new anti-corruption clause in its petroleum agreements (PAs).

These are contained in a press release endorsed by Dr Mohammed Amin Adam, Executive Director of ACEP and a copy made available to the Ghana News Agency.

The statement commends government for its bold architecture, in providing elements in the PA that seek to eliminate corruption, especially through bribery or inducements of public officials, politicians and political parties.

It recognizes the new features in the PAs that can help to increase fiscal and non-fiscal benefits including the removal of the stabilization clause that allows for the implementation of new laws and regulations, the introduction of capital gain tax and cost ring-fencing.

The statement,however, called on government to strengthen the country's anti-corruption agencies, to identify, investigate and expose corruption in the emerging oil and gas industry.

It urged the state to adopt an open and competitive process in licensing oil blocks and make contract disclosure mandatory.

It urged government to detest the practice of rushing to Parliament for the approval of PAs, and rather facilitate the early passage of the Petroleum (Exploration and Production) Bill to stem abuse.

ACEP contemplates how Parliament can effectively scrutinize six PAs, namely, Brittania-U, Heritage, Sahara Energy Fields, UB Resources and A-Z Petrpleum, and approve them in just two days, bringing the total number of PAs approved to eight in four months.

It draws Paliament's attention to potential violation of the local content regulation LI 2204, which provides a minimum equity of five percent for indigenous Ghanaian firms in every PA.

For instance, it noted that indigenous firms, Hills Oil Marketing Company and Royal Gate, which holds five percent each in the Brittania-U and UB Resources' PAs respectively, has been translated into a shortfall of four and four-point-three-five percent.

ACEP suspects fronting by some Ghanaian firms as they failed to submit documentations on their financial and guaranteed performance obligations, and therefore called on government to disclose the beneficial owners of all Companies both local and foreign.

Source: GNA
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