Opinions Wed, 13 Jul 2011

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May Our Oil Be The True Black Gold

‘’May our oil be the true ‘’Black Gold’’ which brings the Black Star of Africa more blessing than Gold brought the Gold Coast.’’ – Kofi Bentil

I do not have to consult the Napoleon Book of Faith nor use the Tarot Cards for Divination to say that the ‘Black Gold’ is not likely to bring us all the blessings we expect. It will rather bring us more pains than gold brought the Gold Coast, looking at the trend of events that have unfolded so far. In the first place, political leadership and technocrats in the GNPC and Ministry of Energy, past and present, are not forthcoming with the truth and hard facts about Agreements entered into with the exploiters call the foreign investors. Agreements that would determine the revenue coming to the Nation are classified as secret not be seen by the public eyes. Any agreement or contract which is for the general good of a society is never hidden from the beneficiaries. Secrecy is equal to corruption, equal to underdevelopment, equal to poverty, equal to diseases, equal to instability. Please, I am not a prophet of doom but a rationalist always looking at both sides of the coin.

In 1951, when Dr Nkrumah was released from prison to become the leader of Government Business, gold was exported from the country for over five hundred years. When Dr Nkrumah assumed office, the official record found on mining was a Memorandum on Mining in the Gold Coast written by the Permanent Secretary of the Ministry of Commerce, Industry and Mines. This was what Davidson Basil said: ‘This pointed out that the whole mining industry was owned by foreign companies, employed many Europeans and sent large funds abroad every year. Although the author had access to all official information since he was the Permanent Secretary of the Ministry, he still found it impossible to make exact estimates of just how large these transferred funds really were. He took the year 1949 and found that the gold mining industry had then earned £ 6.4 million. Of this total he concluded perhaps £3 million can be considered to have been transferred abroad. ‘’ Diamonds in the same year earned £1.4 million, some £550.000 was transferred abroad, for Manganese £2 million was transferred out of an export total of £4 million. ‘’Wasn’t it obvious that the growth of the mining industry helped Britain and the USA or other overseas investors far more than it did help Ghana? Half its earnings or more every year were going overseas, in other words practically all its profits,’ only the crumbs remained at home where the ores were mined’’.

When Dr Nkrumah realised these and knew that it was not proper and fair and thought about a possible tax on these huge transfer out, this was what Davidson Basil said again. ‘’Not far from his office in private homes such as that of Dr Danquah, the men of substance warned that CPP threats to tax these transferred earnings would frighten off the bringers of foreign capital. To Nkrumah at least it was obvious that these ‘’men of substance had a very poor grasp of what they were talking about. No foreign investor able to reap and remove profits on the existing scale was going to be frightened off by its mere reduction’’.

This huge and vast exploitation of our minerals resources by the British and USA to enhance the growth of their economies has continued and persisted up to today to the detriment of our country while our political leaders look on for obvious reasons known to them. For example in 2010, over US$3.2 billion worth of gold and other minerals were exported from the country, around US$250 million only came into Government Accounts as royalties and company profit taxes. Others which were listed to show that 71% of the total was transferred to Ghana were expenses incurred on goods and services bought from other organisations. US$3.2 billion is the mine head value and not the market value which is about US$9.00 billion. Ghana does not derive any benefit from the difference of US$ 6.0 billion and our leaders see it as fair because they say the miners brought their own money to invest.

In the trail of all these massive exploitation over the past 600 years are poverty, diseases, loss of farm lands, loss of forest covers, environmental degradation and pollution of rivers with toxic waste and heavy metals denying local residents source of good drinking water and also preventing them from fishing in the rivers. Fish stock in some rivers are dead or have become unfit for human consumption. ‘’Mine operators placed sign posts at river banks advising residents not to even swim in some rivers. Tap water at Obuasi even contains heavy metals injurious to the human body’’.

‘’At Obuasi, Medical Officers at the Bryant Mission and Obuasi Govt. medical facilities acknowledged that some of the diseases prevalent in the communities in the periphery of the mine are in part attributable to mining. A recent investigative report issued by CHRAJ into activities of mining operations in mining communities reveals that, some of the commonest diseases reported to health facilities are skin diseases, chest diseases including TB, diarrhoeas and malaria as well as typhoid. Communities located very close to centres of mining activities like Anyinam claim air pollution makes them experience dizziness and headache’’ (CHRAJ 2008 Report).

The overall effect of these environmental degradation and pollution is people living in these mining areas are dying slowly by the day, singing their own dirges.

The fiscal regime or arrangement under which the British and USA have heavily exploited our minerals resources leaving us only the crumps which cannot repair or reverse the environmental degradation and pollution which is affecting the lives of people and the country as a whole is the Royalty Tax System.

The dawn of the ‘’Black Gold’’ industry era has broken from the West and moving towards the East. This dawn was greeted and welcome with jubilation, joy and great expectations with the promise that we would never repeat the mistakes we made in the mining sector coming from political leaders and technocrats handling the oil issue, but these statements were only a ruse throwing dust into our eyes and pulling the wool over our faces. Oil, a great environmental degrader and pollutant has never been discussed adequately.

Currently, the oil activities are offshore and it seems nobody is concerned about the negative environmental and social impact it would have on Ghana, especially on people directly living in the areas of operation and by extension to the rest of the country.

Ghana has been shortchanged in the matter of environmental issues. (Ref. Resource Watch Agenda Edition 6 2010). Oil exploitation activities offshore along the whole coastline of Ghana has grave environmental and social consequences which are not being adequately discussed openly.

For example, the pollution of rivers in the mining areas which has led to dead rivers could occur in the sea due to dumping of drilling waste, discharge of ballast water mixed with oil, discharge of grey water, throwing of thrash and garbage overboard by vessels and oil spillages.

All these toxic materials would change the chemistry of the sea in the long term to be driven by the Easterlies towards the coastline which would affect fish stocks. ‘’Keta school Boys’’ anchovies would be the first to suffer extinction. Sea mammals would equally be affected. Last year six dead whales were reported washed ashore in the Western Region within six months in the oil zone, which sent shock waves down the spine of fishermen. Long term effects would be complete extinction of the fishing industry. Early this year fishermen living along the coast from Ada to Aflao were prevented from fishing for 30 days when exploration activities were going on in the Accra/Keta Basin. What will happen when production comes on stream?

Zoomlion can only clean the thrash and the garbage thrown overboard by vessels and dead sea mammals washed ashore. Zoomlion-Oil was purposely set up for this task, but not to directly promote tourism as we were told.

Exploration activities are yet to start in the Voltaian Basin which is an onshore activity covering about 40% surface area of Ghana. Environmental degradation and pollution would not be different from what is going in the mining areas. Drilling waste, used oil and lubricants and other toxic materials would be discharged into the environment which would eventually be washed into the Volta Lake. The area covers the whole basin of the two Volta Rivers to the South. Just imagine the consequences and effects of the Volta Lake becoming polluted with drilling wastes and other toxic materials. Your guess is as good as mine. No EPA official can deny this fact. They are good at playing down these issues.

The crude realities of the oil effects impacting negatively on the environment and the lives of people is being pushed underground and has been compromised. While Ghana is being shortchanged on environmental issues, Ghana is also been shortchanged on the fiscal by the British and USA with our political leaders deeply involved. The fiscal regime, the Royalty Tax System under which gold and the rest were exploited to the detriment of Ghana, is what our leaders have again adopted to exploit our oil resources. Have they not committed the same mistakes in the mining sector they vowed not to commit?

The Royalty Tax System was the first model in the oil industry since 1901, but has been done away with to be replaced by the Production Sharing Agreement in all developing countries across the world. Our leaders have opted for the worst and the most exploitative form of oil agreements and contracts one can find in today’s world oil industry, not considering the long term environmental negative effects, Ghana would be suffering.

Government machinery and other personalities, I believed who should know best, were used to play down the expectations of Ghanaians and to create a myth around the oil and gas industry. The impression was created in the minds of Ghanaians that the oil industry is capital intensive and that Ghana does not have the resources to invest into it, therefore Ghana is at the mercy of the foreign oil companies and would have to accept whatever terms they offer us because they brought their money. I completely disagree with these false assertion and deceit. I am surprised even learned personalities in society have to imbibe these falsehoods and are defending the FOCs saying that the FOCs are even doing us a favour by giving us a carried interest for free. Most often, when I listened to top government officials, I realised they are completely ignorant about the modern trend in the oil industry.

Our situation is becoming that of Uganda where foreign civil groups were telling the people of Uganda that oil agreements were not in their favour and were advocating for their review and government officials and oil companies were on the defence.

Tullow and the other oil companies, according to a report, would make ‘’three times what’s internationally recognised as a fair profit’’. Despite these criticisms government officials and Tullow are saying Uganda will get 80% of the revenue which the report also said are false. Tullow and government officials are doing the same in Ghana.

Tullow has started a serious public relations campaign to look good in the eyes of Ghanaians by throwing the crumbs already into our faces in the name of good social corporate responsibility. Tullow’s listing on the Ghana Stock Exchange is a smoke screen to cover up the huge massive exploitation of our oil and gas resources for the benefit of the British economy once again, the way gold has helped them over the past several decades.

Tullow, good social corporate responsibility includes fairness and equity in sharing the oil revenue with your host country and not what you are doing.

Ghana is sitting on a environmental degradation time bomb awaiting to blast both at sea and on land one day which will be more devastating than what is happening in the mining areas. Our leaders are failing to see into the future and therefore have the given the opportunity to the British and USA to once again exploit our oil resources to the benefit of their countries, leaving behind the social and environmental problems the oil industry would create.

I am beginning to believe and see our political leaders as our modern day slave masters.

Writer: Solomon Kwawukume


Note: The book, Ghana’s Oil and Gas Discoveries: Towards Fall Maximum Benefits, authored by the writer of this article will be launched on 28th July, 2011 at 11pm in the New Conference Hall, Teachers Hall Complex Accra. The book explains the workings of the Royalty Tax System and the Production Sharing Agreement in the oil and gas industry. Make sure you get a copy for your home.

Columnist: Kwawukume, Solomon

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