Ghana lost us$6.004 billion in oil revenue, five years into oil production
Almost five years into oil production, Ghanaians should by now be moving around with heads up smiling with cheers on their faces, breathing sighs of relief from grinding poverty and high hopes of greater things to come. However, it is to the contrary, with gnashing of the teeth, prayers to God to save them and the cedi reportedly besieged by dwarfs from falling further, as the economic woes and problems deepen. The economic crisis facing Ghana are self-inflected as a result of selfishness, nepotism, mismanagement, greed and corruption at all levels of governance coupled with abject lack of knowledge and gullibility from the man in the street to the highest echelons in the society. What is excruciatingly painful is the mediocrity and small-mindedness which permeate the society spilling over into how our oil boon has been handled so far.
Almost five years into oil production, if the right policies and decisions were taken, devoid of the evils mentioned above and a little bit of patriotism and love for one’s country, Ghana would not have been in this mess. There would be no need to levy VAT on sachet water, a basic necessity of life, and on residential homes which are in the pipe line to come. Also, there would be no need for the expensive Euro Bond with the yield of 10.75% per annum, the highest currently in the world.
If Ghana had adopted the world standard and popular Production Sharing Agreement which countries with lesser stature than Ghana, e.g., South Sudan, Chad, Niger, Togo, Republic of Benin, Sierra Leone and Liberia have adopted, a model which the existing and subsisting laws governing the upstream Oil industry, PNDC laws 64 and 84 support, and not the unproven Ghana Hybrid System, the country would not be facing these economic challenges and difficulties. Even, if it should be, not to this extent. Policies and decisions taken are self-seeking and not in the national interest. And yet, they have the audacity to recently announce to the world that Ghana has garnered more revenue from oil than expected. Maybe at the mediocre, subservient standards they set on behalf of on equally unassuming population. Yes, standard that hinge on the subservient premise that the white man discovered the oil in the deep sea; whatever they give us is a blessing! Amazingly, this is a refrain we have heard echoed from the lowest to the highest!
As at the end of June 2015, since production began in December 2010, a total of 151.655 millon barrels of oil was produced valued at US$15.023 billion, at a moving average price of US$ 99.060 per barrel. Under the Ghana Hybrid System which is not supported by any law in Ghana, Ghana got 26.25 million barrels of oil and US$3.029 billion, being 20% of production revenue, which is just about sufficient for Ghana’s needs in a year. The foreign oil companies, our contractors, got away with 125.39 million barrels worth US$11.993 billions. The capital investment of about US$4 billion into the Jubilee Fields which Ghana also contributed to was effectively recovered in 3 years.
If Ghana had adopted the Production Sharing Agreement without participation which is optional under the existing PNDC law 84, Ghana would have earned US$9.033 billion, being 60% of production revenue and 91.190 miilion barrels of oil sufficient to meet Ghana’s needs for almost 3 years. For not adopting Production Sharing Agreement, Ghana lost US$6.004 billion and 64.930 million barrels of oil. The calculations to back these conclusions are available and opened to verification from any quarters.
From the above exposition, how can one conclude, that the Ghana Hybrid System is superior to the Production Sharing Agreement and that in the long run the system would inure more benefits to the country, as Ghanaians are being made to believe by GNPC, Petroleum Commission, the Ministry of Petroleum, the Ministry of Finance and the World Bank, Oxfam America, Star Ghana, GIZ and Natural Resource Governance Institute (NRGI), sponsored CSO Platform on Oil and Gas, NGOs and Local Think Tank Groups? The Exploration and Production Bill currently before Parliament contains the fiscal regime that supports the Hybrid System and if passed would give retrospective legal backing to illegal exploitative contracts signed so far.
The adoption of PSA to regulate our upstream oil industry, which laws are already in existence and are still the subsisting laws, has been our message which we have carried to our representatives in Parliament for which we came under attack on 15th July, 2015 by Mr. K. T. Hammond and the Deputy Minister of Petroleum, Mr. Ben Dagadu.
“GIGS and Parliament clash over Petroleum Exploration and Production Bill.” Search to read details on the web.
Some leaders in Parliament had earlier prevented the distribution of the book, Ghana’s Oil and Gas Discoveries: Towards Full Maximum Benefits, donated to Parliament as educational material in July 2013. They claimed the contents should not be known to members of the House. The book outlines the advantages of PSA over the Ghana Hybrid System. Similar donations were made to the National House of Chiefs, the Catholic Bishops Conference of Ghana, some Tertiary Institutions, the Parliamentary Press Corp, the President and the Secretary of the Ghana Journalist Association, ACEP, Natural Resource Governance Institute, Friends of the Nations, KASA, Institute of Economic Affairs (IEA), IMANI Ghana, Centre for Economic Policy Analysis (CEPA) and a whole lot of prominent individuals we can think of.
We have equally carried our message to the doorsteps of the National House of Chiefs, Manhyia, the Council of State, National Peace Council, former Presidents Rawlings and Kufuor, the Academia, the Christian Council of Ghana, the Catholic Bishops Conference, the Steering Committee and the National Governing Council of the TUC, leadership of PNC and the People’s Progressive Party (PPP), GNPC, Ministry of Petroleum, Ministry of Finance, PIAC Association of Ghana Industries, and Private Enterprise Foundation and the President and the First Lady. Surprisingly, none of these individuals, organizations and Institutions has made any statement on this very important national issue but have kept tight lips.
The only group of people who made passionate statements on the issue are the Paramount Chiefs of the Western Region in October last year after having listened to GIGS made a presentation on the subject in Takoradi, but came under heavy attack and criticism on the web. The next is the Association of Chiefs and Queens for Justice, Peace and Reconciliation of the Southern Sector of the Volta Region on 30th June 2015. GIGS was invited to make a presentation after the failure of one oil lobby supported NGO, Friends of the Nation, to convince the Chiefs and Queens about how good the Exploration and Production Bill when passed into law will be in promoting investments. Some Chiefs who have knowledge about the industry and were privy to the articles GIGS had released challenged them. I was on 15th July 2015 in Parliament accused and criticized by the Deputy Minister of Petroleum for organizing and bringing to Accra about 70 Chiefs and Queens, people who do not know what they were talking about. They know and I know what I am talking and writing about: can they debate me on TV?
We are accordingly renewing our open challenge of 26th August 2014 to the Minister of Petroleum, the Petroleum Commission, Energy Commission, GNPC, Minister of Finance, the CSO Platform on Oil and Gas, ISODEC, ACEP, Natural Resource Governance Institute, the World Bank, Oxfam America, IMANI Ghana and all other Think Tanks groups who are supporting the Ghana Hybrid System over the Production Sharing Agreement to an open public debate to prove us wrong. We urge the Select Committee on Mines and Energy to stay the Bill and initiate a National Public Forum and debate by bringing together on one platform all the opposing groups to articulate their positions on this very important National Economic Issue which is going to affect the present as well as the future generations. It should be covered widely by the media and the press to the public and Ghanaians should be made to decide which way to go.
In conclusion, may we quote the concluding part of the testimony of Mohammed Amin Adam of ACEP on the topic, “Is there any African Resource Curse?”, to the House Sub-Committee on Africa, Global Health, Global Human Rights and International Organizations delivered on 18th July, 2013. “In conclusion, I have already mentioned the issue of bad deals in the Oil and Mining Industries. Some of these bad deals have already been producing resources and the United States like other importing countries is consuming oil from some of these bad contracts. This places an important responsibility on the United States to lead by example in ensuring that Oil and Minerals from countries that promote questionable contracts tainted with corruption are not patronized”.
May we pose this question to him: if he was aware that Ghana’s Oil Contracts were bad deals which GIGS has also identified as being illegal, ultra vires, unconstitutional and not in conformity and compatible with existing laws and UN Charters and Resolutions on Permanent Sovereignty over Natural Resources? If so, why is ACEP leading the CSO Platform on Oil and Gas and other NGOs to have this exploitative Bill pass into law to give legal backing to the bad Oil Contracts detrimental to his country?
SENIOR RESEARCH OFFICER