Ghana Sheds Light on Oil Contracts - Rejoinder

Thinking we may have been asleep and that a new Ghana had arisen with transparency, accountability, and sunshine on all important activities of the government, we started clapping rather loudly when we read the headline “Ghana Sheds Light on Oil Contracts,” (Ghanaweb, 9 Mar 09). But that was not to be. We soon realized that the authors of that piece, a New York based outfit called Revenue Watch Institute (RWI), had actually jumped ahead of themselves. They had no evidence showing the new NDC administration has indeed began “shedding light on oil contracts,” or on any other contract entered into by the previous NPP administration, or on its own before the NPP.

Come to find out, the RWI piece was penned to congratulate “the Government of Ghana on its decision to publicly disclose all present and future contracts with oil companies,” as reported by the GNA 28 Feb 09. Quickly, we concluded that words come a Ghana Cedi a dozen, that action ought to have been the impetus behind that title. So we dug a bit into RWI, visiting them at their website.

We will not dwell on the what/why of the RWI article in this piece. To us, their piece reads a bit like an advertisement for an opportunity to assist Ghanaian officials in their bid to institutionalize transparency and sunshine on governmental activities. That would be a good thing if openness and competition would be the norm.

The interesting thing about RWI is that they tell us they were part of a team that assisted the new Liberian administration to “Amend and Restate” an agreement with Firestone Rubber subsidiary in Liberia. The learned that amended agreement will (1) net Liberia more funds for development and oddly (2) increase net investment by that company. For our purpose, the remarkable thing is that the President Sirleaf government in Monrovia has made those contracts (old and new) public information, to be dissected by anyone interested. Liberians really have good reason to keep on clapping.

In order to get Ghanaians and Ghana supporters such as RWI clapping purposefully for the NDC government, the President Mills administration ought to go ahead and without further delays and certainly with less talk, publish all significant contracts signed by the NPP administration. While Prof Lungu is certainly not the expert in the Ghanaian items, we think that the final contracts and agreements involved are some of the following:

1. All contracts signed on behalf of Ghanaians with all oil prospectors

2. All contracts with gold mining and other companies engaged in extractive industries

3. The Bui Dam contract

4, The Vodafone Agreement

5. The railroad concession contracts and agreements

6. Timber harvesting contracts and agreements

7. The Accra-Kumasi-Bole Toll road High contract

8. The odd one out - Investigate why the price of cement is so high in Ghana and the impact of that on Ghana’s development.

We are arguing that the Prof Mills administration should, publicly, recognize that weak national institutional processes and structures require publication of all those contract details cheaply, effectively, and timely. A dedicated website for the subject is the only option and Adobe .pdf files would be ideal. There are many persons who are ready to provide funding for that website that would still allow the government to program the content and provide updates and additions.

We will also argue that after publication of those contracts, the government ought to next develop a fast-track prioritized plan to re-negotiate all those contracts given changed national circumstances and emergent national development goals. There are many other reasons why such “redemptive,” reactive measures are necessary at this time. For one, it is foolish for a developing country such as Ghana to enter into agreements with private interests that will saddle Ghanaians for years, according to some reports, longer than the whole or half the life span of the average Ghanaian. This is unconscionable and sad, really.

We will also say that there is absolutely nothing wrong with a proud country re-negotiating a contract with anyone, if its officials know what is good for their people and understand that their resource being extracted are depleteable, with “numbered days.”

Before we end this piece, we will highlight a few aspect of the re-negotiated Liberia-Firestone contract as part of our on-going effort to inform interested readers about what is possible if Ghana truly has a Ghana-centered leadership this time around. We will not that the re-negotiated Liberian agreement was approved by President Ellen John Sirleaf 22 Feb 08 after it was reviewed and signed by the Liberian Minister of Agriculture, and counter-signed by the Ministers of Finance and Justice. The contract modifications cover the following:

1. The Liberia-Firestone ends Dec 31, 2041, though renewable, if the sitting Liberian government so chooses. (Effectively good for 25 years, after a stabilization from civil war effects program)

2. Firestone has a right, permit, and license, but those are non-exclusive. It does not mean Liberia cannot enter into another agreement with another entity. Simply, Firestone does not need new authority to operate that business in Liberia

4. All real property is owned by Firestone – unencumbered. Firestone cannot assign its rights or liabilities to another party without approval from the government

5. There are significant provisions with respect to protection of public health and safety, the promotion of employment, training, and education of Liberians, and for protection of the environment

6. Income tax rate for Firestone is pegged at 30% of net taxable rate, and includes Turn Over taxes, and customer user fees (licenses, work permits, residency, vehicles, etc)

7. Firestone will pay a land rental fee by the acre ($2.00), $237, 980/per year – in advance of each year

8. Firestone will pay import duties and taxes on fuel, rice, and other goods, at 50% of the current national duty, except for goods intended to help the company meet it social obligations

9. Firestone will pay real property tax of $170,000 per year of all structures and improvements on government land

10. Firestone is subject to the Ecowas Trade Levy

11. Firestone is subject to inspection on all its imports and exports

12. Firestone will pay into a Rubber Development Fund

13. Firestone will use Generally Accepted Accounting principles and will be audited within 3 months of the end of the Fiscal Year

14. Firestone will develop a 5-Year Development Plan. This plan will be on a rolling basis so that there is never a lag in coverage – for development goals and objectives

15. Firestone will pay 50%, up to $5000, of the cost for a map that Liberia will contract for. We will observe that this is a major weakness of the re-negotiated agreement. Prof Lungu believes that a multinational corporation operating extractive enterprises in Liberia or Ghana ought to have the capacity and stomach to share in the cost of geo-rectified aerial photos of leased lands in addition to land survey using the national coordinate system. This ought to be re-current once every 3-5 years, to better monitor land use at those sites and areas around the concessions. A 50/50 share would not be unreasonable.

Our thanks to Revenue Watch Institute (RWI) for lending a strong voice to the Ghana public transparency and accountability quest and providing useful information of their website. Above all, we think that the reader will agree that the new government of Liberia is on to something. President Sirleaf has certainly raised the bar of transparency and accountability for the Mills administration to top.

While we were clapping, we bumped into the Sirleaf yardstick.

Can you top that, President Mills? Can you top that, NDC?

Can you top that Ghana?

Prof Lungu thinks Ghana can!

3 NOTES:

1. This piece by Pro Lungu is available for download at: http://ghanahero.com/PROF_LUNGU_SAYS/Ghana_Sheds_Light_on_Oil_Contracts_Rejoinder.pdf

2. Visit with the Revenue Watch Institute (RWI), at http://www.revenuewatch.org/.

3. Support passage of a strong Freedom of Information Bill. Log on to www.GhanaHero.com and request you copy of FOIB – Are You Pickable, Mr. Politician?

© Prof Lungu, Okinawa, Japan, 13 Mar 09.