Open letter to Boakye Agyarko on Ghana’s Oil&Gas

By: Andrews Osei Boakye

THE ROTS IN GHANA’S OIL AND GAS SECTOR UNDER NDC AND EYE OPENER TO HON ENERGY MINISTER

PART ONE

Dear Mr. Minister:

 

Congratulations on your appointment. As you take over the reigns of managing the country’s natural resources in the energy sector, I would like to draw your attention and also request your commitment to ensure that the oil and gas sector is not run as it was under the former minister.

As you may know, the former minister, a post master, with little experience in oil and gas was ineffective, myopic and a greedy bastard( to borrow a characterization from his party’s founder) who largely run the sector based on pure ethnocentric and nepotistic basis.

In this sense, I would like to discuss four main areas where the former minister’s ineptitude has cost the country jobs and millions of dollars not to mention the inability to develop capacity in the sector.

ENI CONTRACTS

All of us in the oil and gas sector know that the minister in collaboration with individuals at ENI and the Petroleum commission awarded contracts for the OCTP Sankofa project not on the basis of the lowest bidder with the specified technical capabilities as ENI/GNPC demanded in the tenders of contracts, but rather based on the ethnocentric association of the winners of these contract to the minister and also members of the former president’s family.

It is a known fact that one person, for example, won 60% of all the contracts that was awarded by ENI to the total value of more than $1 billion and yet this individual created less than 400 jobs.

This creation of a private monopoly in the oil and gas sector has not only damaged the potential of job creation and growth in the sector, but has also had a devastating effect on the implementation of the local content law in stifling competition, a law solely enacted to encourage and develop local capacity in the sector.

The former minister openly nullified tenders by rejecting and rescoping tenders with the sole purpose of benefitting this one individual and members of the former president’s family.

We all know what happened in the bidding of the following contracts: early works, transport and installation, subsea systems, offshore receiving facility, to name a few.

It is my hope as you take over the mantle of your office, you will initiate some degree of investigation of individuals at the Petroleum Commission and ENI on how these contracts were awarded or came to be awarded to this individual.

We in the sector know the relationship the individual had with the former country manager of ENI as well as the CEO of the Petroleum Commission and the former minister.

 

PETROLEUM COMMISSION

The PETROLEUM COMMISSION was formed with the sole purpose of being a regulator, to wit, the enforcer of the laws in the sector.

To this end, the PC has sorely failed in discharging its duties. The PC is characterized by being an institution that favors international oil companies over the local companies whether in the handling of disputes or ensuring that these companies comply with the law.

It is a knowfact that the PC granted waivers to ENI for several tenders in direct contravention of the local content law. The PC is also characterized by conflicts of interests as several of the officers at the commission are know to have personal interest in some companies that they are supposed to regulate.

Petitions filed at the PC against the IOCs for violations of the local content law are generally dismissed and not acted upon by the PC.

It is no wonder that less than 5% of the local companies registered with the PC have been able to win contracts with the two major operators of our oil fields.

The frustration shared by those of us in the industry is also shared by the technocrats at the PC who feel neglected and rendered as tools in the administering and enforcement of the local content laws.

There is a palpable sense of frustration and disappointment at the PC as demoralization in the rank and file is the order of the day.

 

LOCAL CONTENT LAW

Mr. Minister, this law was enacted to ensure that the oil and gas sector did not go the way the mining and agriculture sectors have gone.

The essence of the law is to develop capacity in the sector. It is such that the drafters of the law included numerical objective and goals that had to be achieved by the IOCs and local companies.

However, due to the corrupt and preferential administering of the sector by the former minister and the PC, none of these numerical goals have been achieved.

As I mentioned above, the PC shrouds itself in being the waiver-in-chief by waiving obligations and requirements under the law for the IOCs thereby stifling local companies of being able to participate fully in the sector as proscribed by the law.

 

THE INDUSTRY

Due to the shadiness of the former minister and a handful of companies in the sector, the sector is filled with what I will characterize brief-case companies who have no employees and no investments to develop and enhance capacity in the sector.

I find it quite shameful, and frankly unacceptable, that in the 4 years that the former minister was in charge of the sector, less than 2000 jobs may have been created if you consider that the ENI project alone is estimated to cost about $6 billion with some $3billion of contracts already awarded.

As a technocrat myself, I had hope that we could have developed our oil and gas sector to compete with countries like Gabon, Angola and Nigeria to name a few and employ the many graduates who keep getting degrees in the field.

Although our local content law was modelled after those of Norway and Trinidad, the rewards that these two countries have achieved from their laws is nowhere near what Ghana has achieved so far.

I therefore respectfully ask that you dedicate some time and resources to effectively ensure fairness and diversity in the award of contracts in the sector with the goal to create and grow jobs, else we risk making the sector look like the mining sector.

 

Andrews Osei Boakye.

Concerned Ghanaian.