Ghana's E&P Bill riddled with contentious clauses

Ghana's Petroleum Exploration and Production Bill(E&P Bill), a legislation to regulate the upstream oil and gas sector is riddled with several contentious clauses that require revision before passage, the Parliamentary Committee on Mines and Energy has observed.

Explaining the long delay in passing the bill, at a symposium for senior journalists and reporters in Koforidua recently, the Vice-Chairman of the Committee and MP for Damongo revealed that the bill, which is currently before Parliament has 60 out of its 95 clauses considered controversial and needing further clarity.

“The Bill is going through a plenary session and as it goes on, we will do the necessary amendments,” he intimated.

Hon. Mutawakilu was optimistic that all the necessary discussions on the bill would be done when Parliament resumes sitting later this month, adding, “In the view of the Committee, we believe the law will be passed by the end of the year.”

He explained that his expectation was, however, not cast in stone and hence anything could happen on the floor of Parliament. In particular, he said the discussion could take longer than expected, because new amendments may come up and the Committee may be redirected to go and do further work in some areas the legislators may consider important.

The E&P Bill, when passed, will replace PNDC Law 84 because the latter, according to industry watchers, is limited in scope and not robust enough to stand the test of time.

The Symposium was put together by Penplusbytes in partnership with Natural Resource Governance Institute (NRGI) .The meeting was meant to provide an opportunity for reflection and discussions on key extractive policy and governance issues; an opportunity to keep abreast with current developments and trends in the industry; and a time for media practitioners to re-acquaint with vital data and related resources for effective analysis to strengthen their reportage and coverage.

It brought together about 25 media organisations including print, Electronic and online reporters as well as top industry players and experts in the extractive sector including Dr Steve Manteaw, Co-Chairman of the Ghana Extractive Industries Transparency Initiative and Hon. Adam Mutawakilu, Vice Chairman of the Mines and Energy Committee of the Parliament of Ghana.

Hon. Mutawakilu, who made a presentation on behalf of the Chairman of the Committee explained that after the Bill was first laid in Parliament in November 2014, it was referred to the Mines and Energy Committee which has done a thorough work on it. The Committee then laid its report and amendments on the floor of Parliament on the 23rd March 2016 for the plenary, but it could not be discussed before parliament went on recess.

The Bill covers among other areas , Licensing of blocks, Exploration, Development, Decommissioning , Local Content, Domestic Supply obligations, Health and Safety, Environment and Fiscal Regime.

The objective of the current Bill is to provide for and to ensure secure, sustainable and efficient petroleum activities in order to achieve optimum long-term petroleum resources exploration for the benefit and welfare of the people of Ghana.

Several industry players have made input into the Bill since it was draughted in 2010. Among other key stakeholders, who provided comments on the Bill as part of a wider public consultation was the Natural Resources Governance Institute (NRGI).

In its commentary, the NRGI said “the Bill is fairly comprehensive in scope, providing for some public participation in decisions around opening and closing of areas for petroleum activities; establishing a fiscal regime in general terms; and providing for local content and environmental management. The Bill also includes several strong governance provisions such as a public petroleum register and, importantly, an open and competitive bidding process, which has the potential to help Ghana get the best deals for its petroleum resources.” However, the NRGI argues that the Bill could be strengthened in the following key areas:

Ministerial discretion

The current Bill gives the petroleum minister discretion to disregard bid results and to skip the tender process altogether. While there may be good reasons for bypassing or skipping the competitive bidding process under specific circumstances, we recommend that the minister be required to publish the reasons. A decision to enter into direct negotiations following an unsuccessful public tender process should be published and if the minister receives more than one expression of interest within a prescribed time frame, a competitive tendering process should take place, limited to the parties expressing interest.

Limited transparency requirements

The Bill explicitly acknowledges the importance of transparency as key to good governance, providing that petroleum resources shall be conducted in accordance with principles of transparency. The Bill also provides for a public register of petroleum agreements. However, as written, this provision does not provide assurance that the full contracts, as well as their amendments and annexes, will be made public, rather than a simple list of agreements. Contract transparency is an important component of overall transparency in the sector. “Ghana has already published several contracts, and we strongly encourage Ghanaian legislators to build on this positive development by requiring publication of full text of contracts, along with their amendments and annexes” NRGI advised.

Beneficial ownership disclosure

Disclosure of beneficial ownership of licence holders is a key anti-corruption tool allowing all stakeholders to understand who the real natural persons/beneficiaries are, of Ghana's petroleum agreements. Increasingly, countries and international organisations are recognising the importance of disclosure of beneficial ownership to combat corruption in the extractives sector. Disclosure of beneficial ownership is currently encouraged by the EITI and soon to be implemented in the UK and across EU countries under the Fourth Anti-Money Laundering Directive. We strongly recommend that the bill required public disclosure of beneficial ownership of all license holders.

GNPC's role

The Ghana National Petroleum Corporation Law (1983) is now outdated, in the light of the corporation's evolving role in the larger institutional framework governing the petroleum sector. The Bill should, therefore, specify the new overall role and responsibilities of the corporation. It is also important that the rules of operations, governance structures and reporting requirements of the corporation are revisited to ensure that they reflect the government's current goals for the corporation. Given the significant revenues retained by the corporation, it is crucial that the transparency and accountability requirements for the corporation are strengthened to ensure effective management of these revenues. The NRGI concluded that, “Ghana has the advantage of learning from the mistakes of others to lay a solid foundation at a crucial stage of development of its petroleum sector. While this Bill does much to strengthen governance of the petroleum sector, Ghana should not miss the opportunity to ensure that the petroleum law is the strongest possible cornerstone of this foundation.”