Parliament, GIGS clash over petroleum Bill

The Parliamentary Committee on Mines and Energy, Civil Society Organisations and the Ghana Institute of Governance and Security (GIGS) have expressed divergent views on some provisions in the Petroleum Exploration and Production Bill.

While the CSOs and Members of Parliament praise the entire Bill for its potential to promote investment and have applauded Ghana's Hybrid System of Petroleum agreement in the Bill, GIGS, on the other hand, is unconvinced about the prospects of some of the fiscal provisions.

GIGS holds a firm opinion, supported by cogent calculations that, “the Bill in its present form is simply either a clueless giving away of Ghana's petroleum resources on a silver platter or a conspiracy to perpetuate fraud and robbery on the mass of Ghanaians and deny them a fair and equitable share of her oil resources in the name of attracting foreign investment, which is just a hollow trope in a Ghana with proven oil reserves.”

GIGS believes the adoption of Production Sharing Agreement (PSA) is key to maximising Ghana's potentials from the oil resources.

An article authored by Mr Solomon Kwawukume under the headline, 'Cluelessness or a Conspiracy to Perpetuate Fraud and Robbery of Ghanaians?' argues that Ghana would have been better off if it had operated under the PSA.

“We believe the introduction and application of pure Production Sharing Agreement would be in the best national interest. If Ghana was operating under the pure Production Sharing Agreement, the country would have earned between US $5 billion and $6 billion as at 30th September, 2014, thus ameliorating the hardships and the crisis which has engulfed the whole nation, endangering Peace and Stability,” states the article.

It said currently, there were 81 countries in the world, 34 in Africa, producing Oil and Gas under what it describes as “progressive fiscal arrangement.”

“Is Ghana claiming to be wiser than all these 81 countries moving away from progressive, fairer and equitable Production Sharing Agreement to the exploitative Modern Concession?

“What is happening is an attempt to give retrospective legal backing to these agreements and contracts by introducing into this Petroleum Exploration and Production Bill, Modern Concession fiscal provisions to consolidate and give legal effects to these obnoxious and exploitative agreements and contracts signed up to date,” the article observed.

The article was published following a meeting in July among members of the Mines Committee of Parliament, CSOs and the GIGS.

At the said meeting, the article stated; a member of the Committee, Hon. K. T. Hammond and the Deputy Minister of Petroleum, launched an attack on the Snr. Research Officer of GIGS to show them where in the PNDC Law 84 it was stated that Ghana should adopt PSA.

In his response, the Snr. Research Officer drew the attention of Hon. K. T. Hammond to the fact that though PNDC Law 84 did not state “PSA” in words in any section, both PNDC Laws 64 and 84 when taken together show clearly that the Drafters of the Law had PSA in mind and that the Laws have all the relevant features and principles that are contained in PSA. And that the Model Production Sharing Agreement of 1995 between the Ghana Government, the GNPC and the Contractor was based on these two Laws.

Records available at Oxford Institute for Energy Studies and Barrow Company Inc. indicate that earlier agreements entered into by Ghana based on these Laws were Production Sharing Agreements (Contracts).

The article continued that the Snr. Research Officer also demanded from Hon. Hammond to show which sections of PNDC Law 84 contained Carried Interests and Additional Oil Entitlements, which he failed to answer. The issue, according to the article, resulted in exchanges between the Executive Director of GIGS and Hon. Hammond for a while until the Chairman called for a halt.

It said GIGS justified its position for the adoption of PSA, indicating that the financial and economic gains that would accrue to Ghana and provided them with a list of 81 countries in the world, 34 in Africa, producing under PSA or signed unto it to prove the popularity of the system.

It added that the Petroleum Commission made a presentation on behalf of the Ministry of Petroleum to discredit the GIGS and its call for the adoption of PSA by Ghana.

It said the Petroleum Commission justified what is being called Ghana Hybrid System as being superior to the Production Sharing Agreement without any scientific calculation to back that claim, but concluded that it would yield 57% of Total Production Revenue from the Jubilee fields over its entire production life.

For GIGS, the claim that Ghana Hybrid System is superior to the PSA could not be true as the PSA is currently the most popular and equitable fiscal regime applicable in the Upstream Oil Industry in the World.