Perfect Pre Planning Prevents Poor Performance

Part 2

Corruption thrives in the dark. If Ghana is to turn her oil find into a blessing and not a curse, then the first important step is to build on the goals of transparency. There is no general system of transparency that is effective for every society and culture. It is up to the people of Ghana to design and implement their own transparency model. At this point, I wish to cite two examples. Over the past ten years, every household in Ghana that consumes electricity is levied a small surcharge which specifically goes towards the provision of street lights. The question is, where are the street lights, how much has accrued thus far, is the surcharge paid into a fund, if so, is it backed by law, who administers such a fund, are there any published accounts of the fund, are the citizens of Ghana being informed how many streets lights were constructed by such a levy each year? The people of Ghana have every right to know what happens to the levy they pay. Where is the transparency and accountability?

I was surprised to learn earlier this year that, Ghana had a fund called the Mineral Development Fund which was set up many years ago before this current government came to power. Every year, 10% of our annual gold proceeds is paid into this fund and yet, the Mineral Development Fund is not backed by law, only God knows how much has been paid into the fund thus far, nobody knows the aims and objectives of the fund, nobody knows how much monies have been dispersed from the fund, what projects have been supported by the fund? Nobody knows how much royalty payments go to the Obuasi Metropolitan Assembly and what the proceeds are used for? All these information should be published so that, the citizenry and civil society can demand accountability. However, basic elements of transparency in the oil and gas sector in Ghana should include the following:

The Government of Ghana should remove all obstacles, legal or political, to the transparent disclosure and monitoring of the oil and gas sector. This would include removing non-disclosure clauses in contracts and providing guarantees of freedom to publish revenue amounts. There should also be a revision of the State Secret laws. For example, if a Minister has credible information that, a fellow Minister or Ministers are siphoning away oil revenue through fictitious deals and duly informs the President of the Republic of Ghana and no action or investigation takes place, with the revision of State Secret laws, the Minister can under the Whistleblowers Act file a report with CHRAJ or the SFO without falling foul of the Oath of Office.

Oil companies in Ghana should publicly disclose on a regular and timely manner, all net taxes, fees, royalties and other payments made to the Government of Ghana including, compensation payments and community development funding. Companies should also pledge to respect internationally recognized environmental and health standards regardless of their enforcement in Ghana. The Government of Ghana should avoid doing business with any company whose officials even suggest that such payments should not be made public. Civil society in Ghana should consider instituting a system to rank oil and gas companies operating in the country according to their transparency and accountability.

There should be a publication, at a minimum in two national daily newspapers and on the internet of the following by the Government of Ghana:

All information having to do with issuance of licenses, whether tendered or negotiated should be published.

All contracts and all procurement information should be known.

All bonus and royalty payments received to date.

There should be a production of all oil statistics by field and permit so that, the people of Ghana knows exactly how much oil is being produced by each oil head. Such an action, will deal with the issue of unaccounted oil or “illegal bunkering”. In the event that, Ghana suffers from “illegal bunkering”, government should publish how many barrels of oil per day it loses and how much revenue is lost. Measures to stem such a tide should be made known to the citizenry. Nigeria loses between 70,000 to 300, 000 of barrels per day due to “illegal bunkering” at a cost of $4 billion per year in lost revenue. Ghana cannot afford such a scenario.

The government should publish the amount of crude oil that is refined for example by Tema Oil Refinery and proper computerised records must be kept. Why do I say so? The Nigerian National Petroleum Corporation (NNPC) could not explain how refineries in 1999, 2000 and 2001 received more crude oil than was sent from oil terminals. Due to inadequate and improper record keeping, “illegal bunkered” oil found its way into the oil refineries, refined at no cost and then sold on the black market. If for example, TOR expects to refine 100,000 barrels of crude oil per day in the month of March 2010 but, continually receives 160,000 barrels per day, an official statement has to be issued explaining the increase. Because the Nigerian National Petroleum Corporation maintained insufficient records, it was unable to establish how much crude oil was leaving the oil terminals and how much was arriving at the refineries. This increased the likelihood of corruption since, without adequate records, crude oil that was supposed to be shipped to refineries was easily diverted and sold illegally. We need a much better system of controls and record keeping to preventing the diversion of crude oil between the oil terminals and refineries.

The Freedom of Information bill should be passed into law. This would give Ghanaians the right to request information and receive information from public bodies about the conduct of public business and hence, would help in opening public spending up to greater scrutiny and bring transparency to the oil and gas sector.

The government should take steps to increase revenue transparency at the national, regional and district level. For example, monthly or annual allocations of oil revenue from the Ministry of Finance to the Metropolitan, Municipal and District assemblies should all be published in local newspapers.

I recommend the establishment of a National Public information Centre where all oil and gas related information would be available. This should be staffed with information officers and should have a Web facility where documents that are to be made public will be available. It is equally important to have access to complete, readable, and comprehensible physical copies in local language. This information should include not only reports in summarized and understandable form but also access to the underlying data so that independent checks can be made.

The Government of Ghana should make public all prices at which it sells its oil and gas. This should include fiscal prices for calculating costs in production sharing contracts.

The numbers of all domestic and foreign bank accounts into which oil revenues are to be paid should be published (so oil companies can refuse to make payments to unknown accounts that might belong to individuals).

The government should encourage a certain percentage of retention of capital by the oil companies in Ghana and should make efforts to discourage capital flight. However, because our laws guarantee the freedom to repatriate profits from Ghana, the government should ensure that, such repatriation satisfies the laws of the land. However, all repatriated profits should be transparent and published. We do not want the situation whereby, Spacefon Areeba was sold to MTN leaving behind an unpaid tax obligation of $800 million dollars.

The identities of all partners in joint venture agreements should be known.

Balance sheets of accounts into which oil and gas revenues are deposited should be published annually including transfers from the oil account.

Access to significant information for citizens, opposition political parties, government agencies, non-governmental agencies, the press, companies and parliament will ensure accountability.

There should be freedom for scholars and academic research centres to study Ghana’s oil sector and publish their findings and conclusions.

The World Bank and IMF and Export Credit Agencies should make transparency and accountability a conditionality attached to all loans and assistance to Ghana and all oil and gas companies operating in Ghana. If Ghana and international oil and gas companies operating in Ghana do not abide by these conditions, no further assistance should be made available. Ghana and international oil companies should be rewarded if only they abide by international best practices.

Both national and international non-governmental organisations should strengthen their capacity to collect and disseminate information, develop independent monitoring, and lobby Government, companies, and international financial institutions. NGOs should also form “umbrella” coalitions that unite environmental, human rights, indigenous rights, scientific, and other constituencies affected by petroleum arrangements.

Nana Yaw Ossei London.

nyossei@yahoo.com

All the presidential aspirants have advocated for the establishment of a Special Oil Fund. What should a Special Oil Fund entail, should the fund be backed by law, who should have oversight responsibility, should the fund be audited by the Auditor General of the Republic or by an International reputable firm of auditors, how should membership of the oversight committee be composed, should the Special Oil Fund be contracted out to a foreign financial institution since true independence may not in practice exist in Ghana. My next article will tackle all these issues with examples from Norway, Sao Tome and Principe, Kuwait, Chad and Azerbaijan.