Business News of 2014-08-17

Oil contracts not null and void – ACEP

Energy Think-Tank, Africa Centre for Energy Policy (ACEP) has described as inaccurate and misleading, a statement from a senior research fellow to the effect that all petroleum contracts so far signed are illegal.

The Research Fellow, Mr Solomon Kwawukume, who is with the Ghana Institute of Governance and Security had said that the development was in contravention of PNDC law 64 and 84, adding that Ghana had lost so much to the benefit of the petroleum companies currently operating in the country.

According to him, the spirit and intent of PNDC Law 64 and 84 is to ensure that every petroleum agreement between the government of Ghana and any petroleum company is a production sharing agreement, but stressed that all the existing contracts were signed under concessional agreement instead.

He therefore proposed that all the petroleum agreements signed should be declared null and void since they are not inconformity with the PNDC law 64 and 84 which is the only petroleum existing law in the country now for all petroleum exploration and production agreement.

But in an interview with Business Finder, Director of Policy and Research at ACEP, Mr John Peter Amewu challenged Mr Kwawukume to pinpoint the exact article in the law which makes the contracts null and void.

“There is nowhere in the law that demands or states that Ghana must sign on only to production sharing agreements,” Mr Amewu said.

Mr Kwawukume cautioned Parliament not pass into law the Petroleum Exploration and Production Bill 2013 in its current form because it will further deprived the country of the full benefit of the country’s oil and gas.

Cabinet has approved the Petroleum exploration and Production bill 2013, and it is expected to be laid before parliament for approval into law to regulate the upstream oil and gas industry in Ghana.

He implored lawmakers in the country to make sure that the bill is thrown into the dustbin when it is laid before Parliament. The bill is a complete endorsement of the wholesale of the country and posterity will never forgive them, he insisted.

Solomon Kwawukume said several effort have been made by the Institute to get members of parliament and the leadership of the country to understand the current path the country is threading in issuing oil contracts and blocks to companies and its implication, but unfortunately, nobody seems to care.

He said “the institute, for instance, has also donated 300 copies of their book Ghana’s oil and Gas Discoveries: Towards full Maximum Benefits a year ago to Parliament to be distributed to members as educational material to enable them appreciate which course Ghana should tread. To our surprise, 200 copies were left on the floor in the Clerk’s office because it is alleged some leaders in Parliament said the contents of the book should not be known to the greater majority in Parliament. I was compelled to collect them on 16th July, 2014.’’

He said if Ghana was operating under Production Sharing Agreement, the country would have earned over US$4 billion at the end of December 2013 and at the end of 31st March 2014, Ghana should have earned over US$5 billion but the country could only earned US$1.8billion in 3 years while the foreign oil companies made away with US$7.590 billion. At the end of 31st March, 2014 Ghana earned US$2.089 billion while the contractors made away with US$8.448 billion in the name of investment.

The Executive Director said "If our political leaders and the technocrats were to throw away their self-interests and be bold enough to adopt the pure PSA, Ghana, with revenue accruing from the Jubilee Fields alone would experience a great transformation. Ghana would earn over US$50 billion in 20 years as against the US$20billion and US$19 billion estimated by the IMF and the World Bank respectively.'’