Ghana’s emerging Oil and Gas industry is receiving a lot of attention from the world, including the local ‘Civil Society Platform on oil and Gas’ which raised concerns over Ghana’s preparedness to produce oil, reports Ebenezer SABUTEY
In a report, titled ‘Ghana’s oil Boom – A Readiness Report Card’, the Ghana Civil Society Platform on Oil and Gas expressed regret that nearly five months into the onset of oil production, vital laws and institutions to govern the industry are still under discussion.
The report, written by the 120-member Platform (membership is drawn from both organized groups and individuals), evaluated the performance of government in managing the challenges the emerging oil sector presents and drew attention to issues that need immediate action by government and its partners.
The report points out that, while the commercial development of the Jubilee has been fast-tracked and brought into production in three-and-a-half years, the development of the legal and regulatory framework has lagged far behind, hampered by delays, political wrangling and a change in government at the beginning of 2009.
Much of the work done in terms of policy development by the previous New Patriotic Party, (NPP) government of President Kufuor was put aside by the government of National Democratic Congress (NDC) led by President Mills in 2009.
Specifically, the report said Ghana embarked on oil production without a revenue management law. There was also no enabling legislation to establish an independent regulator for the oil and gas sector.
While a policy on local content had been discussed, no legislation designed to ensure minimum levels of Ghanaian participation in the sector had been introduced.
Government however introduced the Petroleum Commission Bill in January 2011 to establish an independent regulator for upstream and midstream petroleum activities.
It talks about plans to introduce a Local Content and Local Participation Bill and to re-introduce the Petroleum Exploration and Production Bill.
The report evaluates the government’s performance in 10 thematic areas: thus Transparency, Independent Regulation of the Sector / Role of GNPC, Licensing and Contracts, Citizen Participation / Public Oversight, Petroleum Revenue Collection, Oil Revenue Management / Oil Funds, Linking Oil Revenue Spending to Development Planning, Budget Openness and Public Financial Management, Social and Environmental Issues and Local Content.
It also evaluates the cumulative performance of Ghana’s parliament, donors, oil companies and civil society itself. Performance is set against recommendations made in the February 2009 report, issued by the Integrated Social Development Centre (ISODEC) and Oxfam America.
As the 2009 report noted, “The needed institutions, regulations, and transparency measures should be in place early enough to avoid the corrosive and corrupting effects of oil booms seen elsewhere in Africa. Because the Jubilee field is in development, the government does need to move at deliberative speed to be able to manage this large project. At the same time, Ghana needs to be careful to control the pace of the development of the petroleum sector so as not to let commercial developments outstrip the capacity of the government and society as a whole to meet the myriad challenges.”
Performance is also measured against urgent recommendations made by a broad range of civil society groups and concerned citizens in a communiqué issued after the “Citizens Summit on Oil and Gas” held at the Accra International Conference Centre in June 2010.
As the communiqué noted, “We endorse these recommendations and observations, convinced that, it is only through effective coordination of our efforts, national consensus around the critical decision areas, continuous vigilance by Ghanaians on the sustainable management of petroleum resources, revenues and the environment, in pursuant of our rights as citizens to participate in the governance processes of our country, as enshrined in the constitution of Ghana, that the petroleum resources of Ghana can be used for sustainable national development and thereby avoid the temptations of following the path of ‘resource management curse.’
Scores are assigned based on: coverage of recommendations from benchmark reports (60%), good innovations (30%) and demonstrable commitment to implement recommendations (10%).
In assessing the various stakeholders, a validation workshop was organized and attended by most of the stakeholders. Those who did not attend received advanced draft copies of the report and sent comments and observations. Grading starts from A (excellent) to E (fail). C is a fair performance. The report puts all stakeholder s on a fair performance.
Major Findings and Observations
On the part of the Government of Ghana, the report found that significant efforts have been made to entrench transparency with regards to petroleum management, a fact, the report says is further re-enforced by the extension of the Extractive Industries Transparency Initiative (EITI) to the oil and gas sector.
The passing into law of the Petroleum Revenue Management Bill according to the report is aimed at introducing a strong and clear legal framework for managing petroleum revenues.
The Petroleum Commission Bill has also been laid before parliament in addition; it notes that, government is developing the Petroleum (Exploration and Production) Bill and the Local Content Bill to be laid before parliament.
The report observes that, in developing the legal framework, government allowed citizens’ participation through public forums and consultations. However, important concerns such as contract disclosures, open and competitive bidding for oil blocks for which the GNPC has good data, lack of independent regulations of petroleum operations, the environmental preparedness and problems associated with conducting Environmental Impact Assessment and Strategic Environmental Impact Assessment, remain issues of major concern that are yet to be addressed.
There are also concerns regarding the spending of expected petroleum revenues including: the dangers of collateralization of oil revenues, budget openness, adherence to budget decisions and fiscal irresponsibility, among others, which may undermine efforts at ensuring sustainable management of petroleum resources.
It argues that, Parliament also lacks the technical capacity to scrutinize petroleum contracts and also lacks the strength and ability to check potential abuses in the management of petroleum revenues, citing weak parliamentary enforcement of its resolutions as the basis for this conclusion.
Ghana’s donor partners, according to the report, provided significant support to the country including technical, financial and other interventions to establish a robust oil and gas sector. In spite of this, there continues to be a lack of coordination of support and policy advice among donors.
It points out that, some donor agencies do not extend support to civil society although they acknowledge the role civil society plays in the exercise of oversight in the management of the petroleum sector.
On the petroleum companies, the report observed that, the Jubilee Partners under a fast-track approach ensured the delivery of oil in a record time. Some of the Jubilee partners, it says, have also shown modest social and environmental responsiveness.
It however, notes that, with the exception of Tullow, the others have neither demonstrated transparency in the disclosure of payments to the government so far, nor expressed willingness to disclose petroleum contracts.
There continues to be greater suspicion in communities bordering the Jubilee area on the ‘good’ intentions of the companies in matters such as social investment, response to livelihood losses and shared use of the sea.
Civil society, according to the report, has contributed immensely to the development of the policies and legislation for the petroleum sector.
Their input, it notes, have led to very important provisions in the legislations such as the Public Interest and Accountability Committee; a citizen based oversight body to monitor petroleum revenue inflows and outflows.
It underscores the need for continuous capacity building of civil society actors to hold public officers accountable.
In a report, titled ‘Ghana’s oil Boom – A Readiness Report Card’, the Ghana Civil Society Platform on Oil and Gas expressed regret that nearly five months into the onset of oil production, vital laws and institutions to govern the industry are still under discussion.
The report, written by the 120-member Platform (membership is drawn from both organized groups and individuals), evaluated the performance of government in managing the challenges the emerging oil sector presents and drew attention to issues that need immediate action by government and its partners.
The report points out that, while the commercial development of the Jubilee has been fast-tracked and brought into production in three-and-a-half years, the development of the legal and regulatory framework has lagged far behind, hampered by delays, political wrangling and a change in government at the beginning of 2009.
Much of the work done in terms of policy development by the previous New Patriotic Party, (NPP) government of President Kufuor was put aside by the government of National Democratic Congress (NDC) led by President Mills in 2009.
Specifically, the report said Ghana embarked on oil production without a revenue management law. There was also no enabling legislation to establish an independent regulator for the oil and gas sector.
While a policy on local content had been discussed, no legislation designed to ensure minimum levels of Ghanaian participation in the sector had been introduced.
Government however introduced the Petroleum Commission Bill in January 2011 to establish an independent regulator for upstream and midstream petroleum activities.
It talks about plans to introduce a Local Content and Local Participation Bill and to re-introduce the Petroleum Exploration and Production Bill.
The report evaluates the government’s performance in 10 thematic areas: thus Transparency, Independent Regulation of the Sector / Role of GNPC, Licensing and Contracts, Citizen Participation / Public Oversight, Petroleum Revenue Collection, Oil Revenue Management / Oil Funds, Linking Oil Revenue Spending to Development Planning, Budget Openness and Public Financial Management, Social and Environmental Issues and Local Content.
It also evaluates the cumulative performance of Ghana’s parliament, donors, oil companies and civil society itself. Performance is set against recommendations made in the February 2009 report, issued by the Integrated Social Development Centre (ISODEC) and Oxfam America.
As the 2009 report noted, “The needed institutions, regulations, and transparency measures should be in place early enough to avoid the corrosive and corrupting effects of oil booms seen elsewhere in Africa. Because the Jubilee field is in development, the government does need to move at deliberative speed to be able to manage this large project. At the same time, Ghana needs to be careful to control the pace of the development of the petroleum sector so as not to let commercial developments outstrip the capacity of the government and society as a whole to meet the myriad challenges.”
Performance is also measured against urgent recommendations made by a broad range of civil society groups and concerned citizens in a communiqué issued after the “Citizens Summit on Oil and Gas” held at the Accra International Conference Centre in June 2010.
As the communiqué noted, “We endorse these recommendations and observations, convinced that, it is only through effective coordination of our efforts, national consensus around the critical decision areas, continuous vigilance by Ghanaians on the sustainable management of petroleum resources, revenues and the environment, in pursuant of our rights as citizens to participate in the governance processes of our country, as enshrined in the constitution of Ghana, that the petroleum resources of Ghana can be used for sustainable national development and thereby avoid the temptations of following the path of ‘resource management curse.’
Scores are assigned based on: coverage of recommendations from benchmark reports (60%), good innovations (30%) and demonstrable commitment to implement recommendations (10%).
In assessing the various stakeholders, a validation workshop was organized and attended by most of the stakeholders. Those who did not attend received advanced draft copies of the report and sent comments and observations. Grading starts from A (excellent) to E (fail). C is a fair performance. The report puts all stakeholder s on a fair performance.
Major Findings and Observations
On the part of the Government of Ghana, the report found that significant efforts have been made to entrench transparency with regards to petroleum management, a fact, the report says is further re-enforced by the extension of the Extractive Industries Transparency Initiative (EITI) to the oil and gas sector.
The passing into law of the Petroleum Revenue Management Bill according to the report is aimed at introducing a strong and clear legal framework for managing petroleum revenues.
The Petroleum Commission Bill has also been laid before parliament in addition; it notes that, government is developing the Petroleum (Exploration and Production) Bill and the Local Content Bill to be laid before parliament.
The report observes that, in developing the legal framework, government allowed citizens’ participation through public forums and consultations. However, important concerns such as contract disclosures, open and competitive bidding for oil blocks for which the GNPC has good data, lack of independent regulations of petroleum operations, the environmental preparedness and problems associated with conducting Environmental Impact Assessment and Strategic Environmental Impact Assessment, remain issues of major concern that are yet to be addressed.
There are also concerns regarding the spending of expected petroleum revenues including: the dangers of collateralization of oil revenues, budget openness, adherence to budget decisions and fiscal irresponsibility, among others, which may undermine efforts at ensuring sustainable management of petroleum resources.
It argues that, Parliament also lacks the technical capacity to scrutinize petroleum contracts and also lacks the strength and ability to check potential abuses in the management of petroleum revenues, citing weak parliamentary enforcement of its resolutions as the basis for this conclusion.
Ghana’s donor partners, according to the report, provided significant support to the country including technical, financial and other interventions to establish a robust oil and gas sector. In spite of this, there continues to be a lack of coordination of support and policy advice among donors.
It points out that, some donor agencies do not extend support to civil society although they acknowledge the role civil society plays in the exercise of oversight in the management of the petroleum sector.
On the petroleum companies, the report observed that, the Jubilee Partners under a fast-track approach ensured the delivery of oil in a record time. Some of the Jubilee partners, it says, have also shown modest social and environmental responsiveness.
It however, notes that, with the exception of Tullow, the others have neither demonstrated transparency in the disclosure of payments to the government so far, nor expressed willingness to disclose petroleum contracts.
There continues to be greater suspicion in communities bordering the Jubilee area on the ‘good’ intentions of the companies in matters such as social investment, response to livelihood losses and shared use of the sea.
Civil society, according to the report, has contributed immensely to the development of the policies and legislation for the petroleum sector.
Their input, it notes, have led to very important provisions in the legislations such as the Public Interest and Accountability Committee; a citizen based oversight body to monitor petroleum revenue inflows and outflows.
It underscores the need for continuous capacity building of civil society actors to hold public officers accountable.
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