The opposition National Democratic Congress (NDC) on Wednesday held a forum on Ghana’s energy sector at the Alisa Swiss Spirit Hotel, Accra.
It was led by John Abdulai Jinapor, former Deputy Minister of Energy under the theme, ‘State of Ghana’s Energy Sector: Confronting Corruption and Ensuring Wealth Creation for all, not a few’.
Responding to some of the claims raised by Vice President Dr Mahamudu Bawumia during the NPP's maiden town hall meeting held in Kumasi on Tuesday, 11 February 2020, JJ, as he's popularly called, said:
“It is important and I like it that Dr Bawumia decided to do some comparisons, we welcome that comparisons. Indeed, we want them to bring that on because we hold a superior record head-to-head, pound-for-pound, eyeball-to-eyeball when it comes to NPP and NDC.
If you look at energy sector levies…President Mahama received only GHS3 billion of energy sector levies, President Akufo-Addo is receiving GHS12 billion of these energy sector levies. Not only have they retained it, they have increased the levies on petroleum, they’ve increased the levies on diesel, they’ve increased levies on gas and increased levies on petrol.
“And so, when the Bulk Oil Distributor’s Companies (BDCs) are paid through the energy sector levies, instead of giving credit to the man who dreamt about it, who conceived it, who pioneered it, they rather want to take credit for where they did not sow.”
Attached is the full document
STATE OF GHANA’S ENERGY SECTOR BY JOHN ABDULAI JINAPOR, MEMBER OF PARLIAMENT FOR YAPEI KUSAWGU ON 12TH FEBRUARY, 2020 AT ALISA HOTEL, ACCRA
INTRODUCTION
Thank you, Ladies and Gentlemen, for joining us this afternoon.
This forum on Ghana’s energy sector will provide us the opportunity to examine the state of the sector with emphasis on the Petroleum. It is our hope that this forum shall afford us the opportunity to shed light on some major issues including deliberate acts of state-sponsored corruption within the Energy sector. Furthermore, we shall outline some policy alternatives.
BACKGROUND
We believe – and it is the case – that the energy sector plays a critical role in the socio-economic growth and development of Ghana. This why under the leadership and inspiration of His Excellency John Dramani Mahama, the NDC government, made phenomenal contributions and progress towards energy security for Ghana.
For emphasis, let me add that, this vision of sustainable energy for growth and development was for both present and future generations. For example, in the petroleum sector, prudent policies by the NDC government attracted huge investments and resulted in major discoveries which culminated in the development of the TEN and Sankofa – Gye-Nyame production fields.
Brief History of Ghana's Petroleum Sector
Ladies and Gentlemen,
Recent oil and gas production in Ghana owes its glory to the exploration of hydrocarbon as far back as 1896 in the onshore Tano basin in today's administrative Western Region.
Fast forwarding, when Flt Lt Jerry John Rawlings realised the potential for Ghana to discover oil in commercial quantities, he established the Ghana National Petroleum Corporation (GNPC) as a statutory corporation, through PNDCL 64. As a result, GNPC strategically focused exploration and production of hydrocarbons in Ghana.
Additional investments by successive governments and the advent of new technologies in the fourth republic eventually culminated in the discovery of oil in commercial quantities in 2007. Currently, Ghana has three (3) oil production fields – Jubilee, TEN and Sankofa-Gye-Nyame.
Justifiably, Ghanaians are upbeat and expect proceeds from oil and gas to benefit society.
Petroleum Resources Must Benefit Citizens
Ladies and Gentlemen,
Petroleum Resources are generally owned by the people of Ghana. Therefore, maximum benefits from the resource must accrue to the citizens. This view is anchored in, Article 257.6. of the Constitution which states that, “Every mineral in its natural state in, under or upon any land in Ghana, rivers, streams, watercourses throughout Ghana, the exclusive economic zone and any area covered by the territorial sea or continental shelf is the property of the Republic of Ghana and shall be vested in the President on behalf of, and in trust for the people of Ghana.”
The need for proper and meaningful investment of petroleum resources for Ghanaians who are the beneficial owners of the resource is also based on the fact that, the resource is finite and commodity prices are volatile. Hence the revenues do not last forever.
This demands proper investment in ways that can sustain the nation during periods of boom and bust, as well as when the resource is depleted. Better negotiation skills in order to increase Ghana’s stake in the upstream oil and gas sector is also needed.
NDC Increased Ghana’s Stake in Upstream Petroleum.
Whilst in office, we adopted policies and programmes to ensure the nation consistently increased its share in most petroleum agreements that were negotiated.
Ladies and Gentlemen, Ghana's share in the three oil-producing fields kept increasing – from 13.6% to 20%.
1. JUBILEE (2007) - 13.6%
2. TEN - 15%
3. SANKOFA GYE-NYAME Fields - 20%
This incremental sequence in the growth of Ghana’s shares under the NDC government clearly demonstrates a conscious and consistent effort to increase Ghana's stake in petroleum agreements; especially after it became clear that the nation had the potential of additional oil resource.
The result was that all thirteen (13) petroleum agreements that came to force under the NDC had enhanced fiscal terms and increased national stake.
Additional NDC Reforms in Ghana’s Petroleum Sector
We adopted best practices from other oil-producing countries as a guide in the management of our oil and gas resources. These initiatives provided transparency in the sector, attracted key industry players and boosted investor confidence.
We pioneered the passage of the Petroleum Revenue Management Act, 2011 (Act 815) with the main objective of regulating and managing the utilization of petroleum resources in the upstream sector.
We also took a bold step and established the Public Interest and Accountability Committee(PIAC) as an independent statutory body mandated to promote transparency and accountability in the management of petroleum resources in Ghana.
Furthermore, to anchor the gains made and ensure Ghana becomes one of the leading oil producers in Africa, we passed the Petroleum (Exploration and Production) Act 919, 2016 to provide an enabling environment for increased private participation and investment in the sector.
We were also determined to ensure Ghana did not lose out to the private sector. To this end, the NDC adopted a long term vision of positioning GNPC as a major operator in the oil sector.
To attain this objective, we created an Exploration and Production subsidiary –“Explorco” – in 2012 to pursue commercial stakes in strategically selected exploration and production projects.
Also, as a social democratic government that has always believed in indigenous Ghanaian entrepreneurs assuming the commanding heights of the economy and fully participating in the oil and gas sector, we passed the Ghana Local Content Law (Ghana) in 2013. The law prioritises Ghanaians and their businesses in the award of contracts and employment of staff in the petroleum industry.
We finally passed the Public Financial Management Act 921 in 2016, to among others ensure, discipline and efficient use of public funds as well as the safety, custody and integrity of public funds in line with new global trends.
In addition, to maximize the benefits from the petroleum value chain, we developed a comprehensive Gas Master Plan which led to the development of an ultramodern Gas Processing Plant at Atuabo. The plant utilises the country's gas resource and further ensures the security of energy supply.
President Mahama also took the bold decision to bring finality to the protracted maritime boundary dispute between Ghana and Ivory Coast. This brought certainty to exploration and production of Ghana’s hydrocarbon resources in the disputed fields.
Last but not least, our belief in accelerated development through value addition, led us to reposition BOST and TOR. We, further, secured two (2) million barrels of Ghana's crude oil from the TEN fields to be processed by TOR.
Ladies and Gentlemen, unfortunately, and sadly, our sterling performance in the oil and gas sector have been derailed by the incompetent, greedy and corrupt Akufo-Addo government and his cabal of family and friends.
The Petroleum Sector Under Akufo-Addo
The current NPP administration has rolled back the clock of progress through underhand dealings and general mismanagement of the sector.
The mismanagement of the sector has resulted in waned investor interest in Ghana’s oil sector, diminishing local participation in the upstream sector and reduced confidence in our upstream regulatory institutions as evidenced by the disastrous maiden bidding rounds for blocks under the NPP. All these are happening at a time that Ghana has successfully won the maritime boundary dispute.
Ladies and Gentlemen, I wish to draw specifically on two agreements: the AGM; and AKER agreements to illustrate the corruption and decay that we have investigated and unearthed under President Akufo-Addo in the sector.
1. Sate Sponsored Corruption: The AGM (South Deepwater Tano Petroleum Agreement) Agreement
It will be recalled that in 2014 the Parliament of Ghana approved an agreement between the GNPC, GNPC Explorco, and AGM (itself a joint venture among AGR Energy - Gibraltar, Minexco, and a local Ghanaian Company; MED Songhai).
Under the agreement, the Ghana National Petroleum Corporation (GNPC) secured 10% free carried interest, additional 15% of Participating interest. GNPC’s Exploration and Production Company Limited (Explorco) also secured 24% commercial interest.
However, soon after assuming office, the Akufo-Addo led government decided against all technical and commercial advice to open this agreement for renegotiation under bizarre and opaque circumstances.
In the renegotiated agreement, GNPC’s additional participating interest was reduced from 15% to 3%. As if that was not enough Explorco’s commercial interest of 24% was dropped to Zero. I mean nothing!
Similar to the Ameri/Mytilineos deal (in which we were informed President Akufo-Addo was misled to issue an Executive Approval); the BOST/Movenpiina saga; and the ECG/PDS family and friends deal which has culminated in over US$300 million direct and indirect loss to Ghana, we suspected foul play because the renegotiated agreement is by far the worst deal in the history of Ghana's petroleum sector.
Yes! How on earth could GNPC Explorco drop from 24% to nothing (0%)? And if I may add on which planet will GNPC itself also drop from 15% to 3%? Fellow Ghanaians, even Bokassa, Idi Amin and Mobutu Sessekou will envy this level of state-sponsored corruption.
Our investigations have revealed that a new company by name Quad Energy (which was subsequently awarded a 5% free carried interest) was being registered a month before the Akufo-Addo led Government triggered the Parliamentary processes to amend the Petroleum Agreement.
The critical question is, who are the beneficial owners of Quad Petroleum Company Limited? What services did Quad Petroleum offer to warrant a free 5% carried interest in the Petroleum Agreement? Why this very company registered a month before parliamentary approval was sought still beats the imagination of many well-meaning Ghanaians and experts in the petroleum sector.
Sate Sponsored Corruption:
Ladies and Gentlemen,
The AKER/AGM agreement is the highest level of betrayal by this Government. It clearly smacks of corruption and raises serious transparency and accountability issues?
Indeed, the renegotiated deal was so bad that, Parliament in the exercise of its constitutional duty, could not help but direct the Minister of Energy, Mr. Peter Amewu, to renegotiate the Participating Interest of the State upward from 3% to 10%. Mr Amewu was also directed to ensure a speedy resolution of the issues surrounding the clandestine liquidation of the shares of MED Songhai – the original Ghanaian shareholder.
The Minister was further directed to report to Parliament within 6 months. This is what a nation reaps when its President refuses to protect the nation’s silver.
Interestingly, the Minister refused to act on Parliament's directive within the stipulated time, a clear case of impunity. On the contrary, to our shock and dismay, with some few days for Parliament to rise, the Minister of Energy presented to parliament yet another amendment to this very agreement alongside another AKER Agreement and demanded approval for very sweeping and outrageous concessions for the Company.
These concessions represent the most radical political attack on Ghana’s upstream petroleum sector since the commencement of the fourth Republic. Indeed, the concessions in the amendment are so outrageous that, only a Government that has been compromised will ever contemplate plundering the resources of the state to such unimaginable levels.
The amendments submitted to Parliament by the Akufo-Addo government contained the following:
1. Minister’s Reasonable Assistance
This provision obligates the Minister to provide “reasonable assistance” to ensure that Contractors obtain all licenses, consents and/or authorisations” required for its work. This most unusual amendment makes the Minister the errand-boy for Contractors and undermines the autonomy of regulators and permit givers who are not necessarily under the authority or jurisdiction of the Minister.
2. Production Technology
This provision stipulates that the Minister no longer has authority in approving or rejecting a Plan of Development to determine what technologies will be used in developing and producing Ghana’s hydrocarbon resources.
3. Taxation and other Imports
Sadly, these amendments provide a sweeping tax exemption for Aker and AGM, its sub-contractors and sub-sub-contractors. No withholding taxes in the case of AGM and a reduced withholding tax rate of 5% instead of the 15% withholding tax for any work or services or supply or use of goods, both to domestic and international transactions.
4. Sub-Contractor Tax Exemption
Transaction between Subcontractors to sub-contractor is also not subjected to Withholding tax.
Fellow Ghanaians, the direct beneficiary of these give-aways will be the Norwegian Multinational, AKER which owns and controls both Aker Ghana and AGM and their cronies. Unfortunately, the direct loser is Ghana. What is most worrying is, the cumulative of the medium to long term effect of all these give-aways will be a loss of national control over our precious petroleum resources.
Ladies and Gentlemen, a lot has gone wrong and continues to go wrong in Ghana’s energy sector under Nana Akufo-Addo. It has gotten to the point that whenever we see a joint memorandum from the Honourable Ministers of Finance and Energy, we are filled with trepidation especially as Ghanaians have not yet recovered from the PDS scandal, the Ameri/Mytilineos scandal and the BOST/Movenpiina Scandal.
The Records: John Mahama Vrs Akuffo-Addo
There is a popular saying that, onto whom much is given, much is expected, this adage is certainly not the case when it comes to President Akuffo-Addo and he will surely go down in history as the President who achieved very little for this country despite receiving unprecedented revenue flows.
From the annual petroleum reconciliation reports as published by the Bank of Ghana whereas President John Mahama received a total of 6.4 Billion Cedis, Akuffo-Addo is on course to receive a whopping 20.6 Billion Cedis.
Due to the increased receipts from petroleum resources, trade balance for 2018 recorded a surplus of US$1,617.81 billion. However, a look at the current account balance as at September 2018 clearly shows a deficit of 1.4 per cent.
Whereas President Mahama received total ESLA revenues of 3 billion Cedis, President Akufo-Addo has so far received 9 billion Cedis and scheduled to receive 12 Billion by end of 2020.
The critical question is, what has the Akufo-Addo government used the money for despite all these huge revenue inflows?
On the contrary, the utilisation of revenues especially ABFA and ESLA proceed under this administration has been most disappointing. For instance, in the 2018 financial year, only 49% of ABFA expenditure was used for capital expenditure whilst 51% was utilized for the supply of goods and services, a clear violation of the Petroleum Revenue Management Act.
Furthermore, the lack of both transparency and accountability that has characterised the oil sector under President Akuffo-Addo really gives cause for worry. The PIAC report of 2017 and 2018 reveals that US$655 million out of the total figure transferred to the ABFA which were not utilised cannot be accounted for. In effect US$655 million of Ghana's Petroleum revenues has vanished into thin air.
Ladies and Gentlemen,
It is sad to note that the GNPC which was well-positioned and better resourced to serve the national interest before we left office has been saddled with huge debts due to mismanagement and high levels of opacity that has characterized the corporation.
Available records prove that total guarantees and loans procured by GNPC between 2017 and 2019 has risen sharply to about US$1 billion. Even more worrying is the fact that these gargantuan loans have been contracted without the requisite parliamentary approval in contravention of the PFMA 921.
With respect to Ghana Gas, the NDC demonstrated a better foresight by successfully completing the Atuabo Gas Processing Plant, which has dramatically improved reliable fuel supply in Ghana. It has also reduced the cost of fuel for thermal power production. The Atuabo Gas Processing Plant has also led to an estimated savings of over US$300Million per annum due a reduction of about 80% in LCO imports. This is visionary leadership – thank you, President Atta Mills, of blessed memory; and thank you, President Mahama.
Today, the plant is able to supply about 50% of domestic LPG needs and has created employment throughout the Gas value chain. Thank you, my ministers, of energy and power and all those who made this vision a reality.
But, the story of Ghana under this Government is a sad one. Despite huge receivables from ESLA, the total indebtedness to GNGC stood at US$750,963,424.91 by the end of 2018. If I may ask again, what have they used the monies for?
The resultant effect of their reckless expenditures has culminated in critical sections of the Ghanaian economy retrogressing.
POWER SECTOR DISTORTIONS.
Ladies and Gentlemen,
Before I state our policy alternatives, permit me to touch briefly on the power sector in order to shed light on some pertinent issues. I will be brief.
Let me put on record that President Mahama comprehensively solved "DUMSOR." It was a generational problem but he took the bull by the horn and fixed the problem. Dr Bawumia is on record to have urged Ghanaians not to give Mahama credit for fixing dumsor. So what was Bawumia doing in Kumasi when he lied that they – the NPP, solved dumsor?
I dare challenge this Government to switch off President Mahama’s power plants and the Gas processing plant and I bet you with my last penny, Ghana shall witness DUMSOR of unimaginable magnitude.
Ladies and Gentlemen, the claim by the NPP Government of so-called excess capacity charges is nothing but a ruse to create another avenue to fleece the ordinary Ghanaian. Documents presented by the ECG which is the sole off-taker to these Power Purchase Agreements to Parliament only ended up betraying the insincerity on the part of the Finance Minister. The facts pointed to a completely different picture.
Typical of the NPP, whilst Government officials were busy complaining about what they described as cost arising from excess capacity, a new company by name STRATCON ENERGY was being incorporated in 2017. The company has subsequently received huge payments from revenues raised under the guise of paying for excess capacity. I urge the media to show interest in who the beneficial owners of STRATCON ENERGY are.
A thorough search for the beneficial owners of STRATCON ENERGY will show that, whilst our finance Minister, Ken Ofori Atta, was busily quoting from the bible about how Jesus Christ miraculously fed 5,000 people with 5 loaves of bread and 2 fishes; he was clandestinely feeding the ‘Special 5’ with millions of the Tax payer’s money.
Ladies and Gentle even though the current state of the Energy Sector looks gloomy, let me assure you there is hope with an NDC Government, come January 2021;
What the next ndc government will do
1. The NDC has been at the forefront with innovative policies and legislation to improve power sector governance and service delivery. We will work to improve efficiency in the management of the country’s power facilities and reduce losses.
2. We will increase generation further to meet all suppressed demand, including giving incentives to investors in heavy industries such as aluminium, iron and steel smelting.
3. In line with our policy commitment to create a resilient and non-congested transmission system, the NDC government embarked on projects aimed at improving the country's transmission system and export of Power, we shall continue with this policy.
4. We will continue to develop more sustainable power sources and encourage energy conservation.
5. We will ensure massive investments in the distribution sector to enhance capacity and also improve the technical and operational efficiency of the utilities. To achieve this, we will work to reduce aggregate technical, commercial and collection losses, ensure a transparent and fair billing system, roll out smart metering systems across the country, eliminate bottlenecks associated with acquisition of meters and electricity connectivity for prospective customers, further promote local participation in tendering and procurement processes and pursue policy and corporate reforms to revamp our energy sector SOEs.
6. We increased national electrification access from 54% in January 2009 to 84% by the end of 2016 and brought access level in the Northern Regional to 65%. We shall embark upon an energy for all programme.
7. We shall ensure the energy sector levies are utilised for their intended purposes by providing street lighting, Premix Fuel and expand rural electrification.
8. We shall ensure transparency and ultimately increase Ghana's stake in the oil and Gas sector.
9. We shall ensure that domestic supply of LPG is met by Ghana Gas.
10. We shall also ensure value addition by resourcing, retooling and repositioning TOR to refine the crude oil for domestic consumption.
11. Additionally, we shall support BOST to hold enough strategic stocks, meet their mandate, excavate the deep seated corruption which has bedevilled the company under President Akufo-Addo and punish the perpetrators of the BOST/Movenpiina scandal among others .
12. Finally, we shall remain accountable and transparent in our dealings.
Conclusion
In conclusion, it is an obvious and undeniable fact that the NDC has a far superior record to the NPP as far as the Energy and other related sectors are concerned.
Ghana’s Energy sector is certainly not safe under Akufo-Addo’s Presidency. Our natural resources are being plundered to the benefit of few greedy ones.
Someone recently told me the next NDC government will have a tough time managing the economy on assumption of office in 2021 because the Akuffo-Addo led Government has already caused so much damage.
My response was simple, if these guys can cause so much damage within their first term in office, then four (4) more years for Nana will mean sentencing all Ghanaians to perpetual hardships because of the corruption and greed of this family and friends government.
We owe it to Ghanaians and to future generations; it is a national duty and a social responsibility to rescue Ghana from this wreckage and corruption that is sinking our dear country, Ghana.
The rescue time is now!
Thank you.
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