Government to establish register for disclosure of petroleum contracts

Deputy Energy Minister in charge of Petroleum -Dr. Mohammed Amin Adams-

Ghana will by end of this year make public a petroleum register for all agreements, licenses, permits and authorisations.

Deputy Minister of Energy in charge of Petroleum, Dr Mohammed Amin Adams disclosed this at the just ended 2^nd Africa Open Data Conference in Accra.

The measure will provide clarity on the Petroleum Exploration and Production Act of 2016.

The Minister, however, did not come clear whether full-text contracts or just a simple list of agreements would be made public — the law provides for a readily available and accessible register.

Dr Amin Adam is convinced the register will promote effective and beneficial ownership as part of efforts to address corruption in the sector.

“We have taken a decision that the petroleum register which is required to be set under section 56 of the law act 911 should be established where all the contracts will be published.

“Apart from providing this information we must have a portal within the register where primary contracts can be downloaded by citizens and scrutinise,” he said.

The Minister revealed that there will be an additional portal that provides a data repository similar to what pertains in the mining sector; where data on production, pricing, lifting, even expenditure of revenue generated from the exploitation of oil can be accessed.

“Two portals going side by side so that people will be able to reconcile whether we are disclosing the real amount of revenue due the state whether the state share of oil corresponds with what is negotiated in the contracts etc,” he said.

The move is in fulfilment of Ghana’s promise at an anti-corruption summit in the United Kingdom.

Ghana promised to remain “committed to preventing the misuse of companies and legal arrangements to hide the proceeds of corruption and commits to strengthening further both the Companies Bill and the Petroleum (Exploration and Production) Bill that are currently before Parliament to ensure that we have public beneficial ownership information and central register for all sectors, including oil and gas sector, in line with UNCAC and FATF Recommendations as well as the Extractive Industries Transparency Initiative (EITI) standards that Ghana is implementing; ensuring that accurate and timely company beneficial ownership information, including in the extractives, is available and accessible to the public”.

Dr Amin Adams also revealed that there will also be a value-for-money audit within the public procurement authority to deepen contract transparency.

“Whiles contracts are disclosed, citizens will ask questions about the cost and efficiencies used.

“But if we take for granted that only disclosing money leads to value for money, then we may be misleading ourselves,” he stressed.

The move he believes will ensure that the country is not short-changed by contractors whether foreign or local.

Meanwhile, Co-chair of the Ghana Extractive Industry Transparency Initiative (EITI), Dr Steve Manteaw, indicated that civil society organisations are doing the best they can.

Speaking at a session during the 2^nd Africa Open Data Conference, he complained that most of the oil contracts are conspicuously missing on government websites.

“Government must leave by its word and open the contracts and once that is done civil society will do a good job with it,” he charged.

The 2^nd Africa open data conference was a five-day engagement with stakeholders across the close that opened on July 17 and closed on July 21.

New EITI requirement: Will Ghana comply?

Oil-rich countries under the Extractive Industries Transparency Initiative (EITI) will have to come bare on ‘genuine’ owners of oil, gas and mining companies by the end of 2016.

This is because of what is known as ‘beneficial ownership’, the new requirement to the international governing standards for countries with extractive industries.

EITI seeks to assist countries with extractive minerals to uphold best practices so to avoid what has become known as the ‘oil-curse’ in most oil discovering countries.

Ghana joined the Extractive Industries Transparency Initiative in 2012 and therefore must comply with all requirements.

Benefits to countries

EITI requirement preaches transparency and good governance among participating countries.

Marie Lintzer, the Governance Officer at Natural Resource Governance Institute believes this will tackle corruption in countries.

“It is a very important thing. It will suddenly shed light on how companies’ structures are made in the country and expose some political officials who might be behind deals that may be disclosed”. She said.

Francis Wajah,  a Takoradi-based journalist is optimistic of the benefits if the beneficial ownership requirements are adhered by government.

“It excites me because the more transparent I know that the resources of the country are being managed, the more happy I am.”

As a journalist, he can easily track who is contributing what to avoid any conflict of interest situation.

The conducive and serene business atmosphere in a country is often the driver of investors.

Dr. Anthony Paul, the Principal Consultant at Association of Caribbean Energy Specialists limited, believes it (EITI) has the potential to increase investment if Ghana complies.

“EITI’s call affects your investment climate; the risk people put on your country is reduced”. He explained.

According to him, the requirement will not just get the country high marks but the question is what happens after that.

Not ascribing to an international body such as EITI requirements, he believes, “it takes away the attractiveness and tag as an investment destination”.

In an interview with Seth Twum-Akwaboah, the Chief Executive of the Association of Ghana Industries (AGI), he explained Ghana is losing the shine as the gate-way to West Africa.

This according to him is because the business environment (increase corruption, frequent power cuts etc) is compelling local businesses to be non-competitive.

“In the international oil business circles, transparency and accountability is key to boost the local industries,” he said.

Why Ghana might not comply

The ‘beneficial ownership’, requirement will encourage participating countries but not mandate them, failure to provide the information would be documented, but would not be a cause for non-compliance.

This is according to the EITI beneficial ownership pilot evaluation report issued October, 6, 2015.

Many experts are worried this gives space to developing countries to avoid it compliance.

Again, it does not met out stringent sanctions to countries that do not comply to its requirements apart from suspension.

This means, participating countries can choose to comply or not.

For two year (2012 to 2014), the EITI piloted the new requirement in some selected participating countries but the result is not enticing.

At the end, many of the reports published provided limited information when collecting the data, making it impossible to ascertain whether all companies complied with the disclosure requirement.

Democratic Republic of Congo 2013 report for instance showed that out of 16 countries, only one disclosed beneficial owners.

Nigeria’s 2012 report also showed none out of 41 oil and gas countries was disclosed.

Senior lecturer of the Petroleum Engineering Department at KNUST, Dr. Stephen Donyinah is therefore concerned with whether Ghana can be honest adhering to the new requirement.

“It is a laudable idea but I have misgivings about this, I don’t think there will be honesty in the disclosure”. He explained.

“Many people in high positions will be involved and they won’t like to be disclosed so most people with the expertise could be used to front”. Dr. Donyinah revealed.

The African Centre for Energy Policy and ISODEC are two civil society groups that have raised eyebrows severally on certain decisions in the extractive sector.

They have shared a common assertion that the EITI requirement is not a basis to determine a country’s compliance or not.

Did you know that there about 402 registered oil and gas companies in Ghana?

“We have awarded more contracts than the jubilee field, who are those and why did the EITI report not disclose that,” Executive director of ACEP, Dr. Mohammed Amin Adams quizzed in an interview with Luv Biz at an oil and gas workshop in Accra.

The way forward

In South Sudan, it is a requirement for oil companies to name real owners of oil companies before a company can be awarded oil contracts.

This is to avoid a situation where politicians will register their companies in secrecy and bring them back to be awarded oil contracts.

Dr. Mohammed Amin Adams prescribes the institution of a national law or policy instrument to ensure beneficial ownership is mandatory and disclosed.

“So that we know that some of our people are not taking advantage of our oil resources to benefit and deepen their vested interest at the expense of the rest of the Ghanaian”

Dr. Donyinah quizzed, “do they have detective means to identify independently who the true owners are?.

He is convinced this could be successful if such measures are in place.

As at present, it seems appropriate that the EITI Standard should mandate its participating countries to agree a definition of beneficial ownership that suits local circumstances.

Story by Prince Appiah

Stronger CSOs needed to police Ghana’s oil and gas industry

http://www.dreamstime.com/stock-photography-oil-gas-barrels-drums-symbol-image18662932

The Principal Consultant to the Association of Caribbean Experts is proposing active participation of civil society in Ghana’s oil and gas industry.

Dr. Anthony Paul says strong and effective civil society participation will help to minimize potential mistakes in the industry.

He revealed the absence of such strong institutions means some oil producing countries encounter challenges at production stages.

Dr. Paul says not only should civil society groups be visible, but they must have the capacity to demand transparency and accountability from government.

In an interview with Luv Biz on the sidelines of Oil and Gas training programme for some selected journalists in Accra, he said the civil society organizations should scrutinize activities of the industry on behalf of the citizenry.

The Africa Center for Energy Policy (ACEP) and Integrated Social Development Centre (ISODEC) has been critical on some government decisions especially on some oil contracts.

Dr. Paul says the development is a good start for Ghana.

“Ghana must work on the accountability systems and procedures, those that people can say this is how the decision was made, that part will be important”. He stressed.

To maximize the full potential of gas production in Ghana, experts say strong state institutions are also required.

According to Dr. Paul, building capacities should not be focused on training people but building systems and procedures putting them in place so that people are held accountable.

“Build capacities not only in regulators but also in state companies because they need technical competence, yes, but they are also businesses and need these strong systems”, he explained.

Meanwhile, Dr. Anthony Paul says Ghana urgently needs natural gas master plan.

Drawing on experiences and lessons from Trinidad and Tobago, which analyzed gas market and resources in the early stages of production to meet the country’s needs means an introduction of master plan is not out of place.

After 5-years of going commercial with oil discovery, Ghana has neither Gas Policy nor a Gas Act, situation experts have warned of dire implications.

Ghana’s Gas Processing Plant at Atuabo has a 150 million metric standard cubic feet production capacity of gas per day.

In the last quarter of last year, however, the plant struggled to produce 80 million metric standard cubic feet of gas.

Ghana Gas Company has therefore had to spend millions of dollars to import gas from its Nigerian counterpart, Nigeria Gas.

Energy experts observe Ghana’s gas industry potential remains untapped and under-utilized.

Fingers have always pointed at the absence of regulatory laws for the sector.

Instead, the country is focusing on short- term action plan targeted solely at supplying to power thermal plants to resolve the crippling national energy crisis.

Despite assurances from Petroleum Minister, Emmanuel Armah-Kofi Buah announcing in September 2015 of Gas Master Plan being finalized, the situation remains unchanged.

The MASTER PLAN will provide a transparent regulatory framework to man the industry.

The gas industry in Trinidad and Tobago is a model worth emulating across the globe.

“Ghana urgently needs natural gas master plan”, Dr. Anthony Paul, says.

What Trinidad did very early on was to analyze the gas resources, the country needs, analyze the markets for gas.

They analyzed the country’s vision and aspirations, and designed a Gas vision in line with and supportive of the national development vision.

So this means that, the choices they made on how to use natural gas depicted how they are exploiting it, how to price it and what they will get from it.

All of these decisions were driven by a national vision.

This means, Ghana’s plan must be in line with our national vision by drawing lessons from Trinidad and Tobago.

 Story by Prince Appiah

ANALYSIS:Oil Money Should be Invested In Two Thematic Areas To Maximize Utilization

Ghana’s annual oil revenue is shared between the Ghana National Petroleum Corporation and the Petroleum Holding Fund.

Seventy per cent of the Petroleum Holding Fund is used to support the country’s budget to fund projects in four thematic areas.

However, the Africa Centre for Energy Policy (ACEP) says it will be more prudent to focus on two major areas instead of four.

The centre observes due to the many targeted areas, funds end up being used for unplanned projects at the expense of planned initiatives.

The Annual Budget Funding Amount (ABFA), for instance, has four priority areas – loans and amortization, agriculture modernization, capacity building as well as roads and other infrastructure.

Roads and other infrastructure component of the priority areas continue to draw concerns, especially, from financial experts.

What is other infrastructure?

Energy experts say ‘other infrastructure’ is vague, and therefore multiple projects are embarked upon, thus, derailing the purpose of the oil revenue.

“Because the definition is very vague many projects are roped in so the small oil money was spread over 15 areas instead of the four in 2013, for instance”, Policy Analyst at ACEP, Dr. Ishmael Ackah said.

ANALYSIS

2013 ABFA BUDGET SPENDING

According to the 2013 Public Interest and Accountability Committee (PIAC) Report, total petroleum revenues was US$ 846,767,184 (Gh¢1, 645,585,763).

The Annual Budget Funding Amount (ABFA) for the national budget was US$273.20 million (32.26%).

ABFA allocation to the four priority areas were as follows;

1. Agriculture modernization received Gh¢13.60 million which represents 2.5% of the total.
2. Amortisation of Loans for energy sector Gh¢ got 372.07 million, that is, 68.40%.
3. Capacity Building had Gh¢ 20.18 million which is 3.70% of the total
4. Roads and other infrastructure received GH¢ 372.07 million which is also 68.40%.

The road sector benefitted the most from the funds allocated from the ABFA, with over Gh¢239.23 million disbursed on 63 roads projects and ancillary works.

It is interesting to note the share of ABFA allocated to road projects accounted for only 14.1 per cent of road sector budget for 2013.

According to the report, all road projects that have benefited from ABFA funding had been started prior to the discovery of oil and the creation of the ABFA under the Petroleum Revenue Management Act (PRMA).It is worth noting that virtually all of them were yet to be completed.

It’s, therefore, clear the remaining 85.9 per cent which amounts to Gh¢132.84 (compared to Gh¢159.73 million in 2012)of the ABFA allocations to the “Road and Other Infrastructure” priority area was spent on a range of projects—energy, education, water, housing, security and health.

This brings the total amount of ABFA funds spent on ‘other infrastructure’ projects since 2011 to GH¢293.56 million.

2014 ABFA BUDGET FUNDING

In 2014, petroleum revenue was US$978.02 million which was distributed as follows:

Revenue to the Annual Budget Funding Amount received US$409.07 million (41.82%).

The allocation to the ABFA in 2014 was distributed only to three priority areas in the following proportions:

1. Expenditure and Amortisation of Loans – GH¢163.08 million (68%);
2. Roads and Other Infrastructure – GH¢215.69 million (39.26%)
3. Agriculture Modernization – GH¢170.62 million (31.06%)

No allocation was made to the ‘Capacity Building’ priority area in 2014 because planned expenditure was contingent on related Small and Medium Enterprise (SME) Projects Incubation Facility which never took off.

Approximately, 60% (Gh¢128.22 million) of the total allocation to the ‘Roads and Other Infrastructure’ priority area was spent to construct, rehabilitate, upgrade and resurface 64 roads and related ancillary works.

The share of ABFA allocated to road projects represented less than 17% of the Roads and Highways sector budget in 2014.

The remaining 41% (GH¢87.47 million) of the allocation of the ABFA to the ‘Roads and Other Infrastructure Priority Area’ was spent on energy infrastructure in the Energy and Education sectors, with approximately 86% of the investments going to the energy sector.

2015 ABFA BUDGET SPENDING

The 2015 budget statement and economic policy read by the Finance Minister, Seth Tekper revealed a recurring trend in the spending under the ‘Road and Other Infrastructure’ priority area.

An amount of GH¢ 1, 062,948,161.49 as allocation for the national budget and distributed as follows;

1. Expenditure and Amortisation of Loans for Oil and Gas- GH¢ 322.3 million
2. Road and Other Infrastructure- GH¢ 492.92 million
3. Agriculture Modernization- GH¢ 30 million
4. Capacity Building (including Oil and Gas)- GH¢ 217.16 million

Total spending for Roads and Other Infrastructure amounted to GH¢451.59 million, against a budget of GH¢492.92 million. Of this amount, GH¢76.21 million was spent on the emergency rehabilitation, upgrading, and construction of roads infrastructure.

An amount of GH¢75.7 million was spent on energy infrastructure, that is the supply of electrical materials and equipment for the nationwide emergency power project and the Self-help Electrification program (SHEP) National Electrification Projects.

Again, an amount of GH¢29.55 million (out of the Roads and Infrastructure spending) was spent on Water Infrastructure. This was mainly for the construction of drainage facilities, sea defence and coastal protection works.

Similarly, an amount of GH¢41.8 million was spent on transport infrastructure in respect of the redevelopment and construction of railway lines, railway stations, and the supply of rolling stock.

In addition, a total amount of GH¢45.14 million was spent on education infrastructure, mainly on the construction of facilities for basic and secondary schools, and the upgrading of Science Resource Centres in 100 schools across the country.

It is interesting to note that, an amount of GH¢183.2 million (US$49.2 million) was transferred to the Global Index and Insurance Facility (GIIF) to finance infrastructure projects.

ANALYSIS CONTINUE

These figures provided in this piece indicate clearly that due to unspecific nature of ‘other infrastructure’ has resulted in derailed utilization of the revenue.

In total, spending on ‘other infrastructure’ has been GH¢754.89 million spent in more than thirteen areas, and broken down as follows;

1. GH¢ 293.56 million from 2011 to 2013
2. GH¢ 87.47 million in 2014
3. GH¢ 373.86 million in 2015

In most cases, the supposed spending in the four priority areas are exceeded which questions the focus of the utilization of the oil money.

Dr. Ishmael Ackah warns Ghana will incur unnecessary cost on projects, if the practice is not stopped.

“The practice is not prudent and therefore a limitation on the law,” he said.

Most of the projects initiated are not completed as a result.

In August, 2011, a nine-man implementation committee was set up to put together a framework for the first ever fisheries college in Ghana at Anomabo in the Central Region.

The proposed college was delayed until August, 2015, when Vice-President, Paa Kwesi Amissah –Arthur, laid the foundation for construction to begin.

The ACEP policy analyst indicates that such a project should have been completed by now.

“We are still constructing; if the time over runs, the cost of the project also rises and Ghana will suffer”, he pointed out.

In 2014, an expenditure of Gh¢3.87 million related to the Western Corridor Gas Infrastructure Development Project (WCGIDP) was charged to the ‘Road and Other Infrastructure’ priority area instead of the ‘Expenditure and Amortization of Loans’ category.

This is besides the fact that a significant proportion of allocations to ‘Expenditure and Amortization of Loans was unused during the period under review.

RECOMMENDED SOLUTIONS

To better utilize the money, Dr. Ishmael Ackah suggests funding support should be restricted to only two areas at a time.

He believes agriculture and education be targeted for future benefit when the oil is exhausted after the 20-year life span.

“Instead of targeting so many areas, just focus on two areas and invest in them for a three- year period. After, we assess and see how far we’ve come; then we select two other areas and do same’’, he emphasized.

This, according to Dr. Ackah, will be prudent because it will enable authority to complete projects within the stipulated time.

Experts believe that many parts of the country will be brought out of under development, if this method is employed.

PIAC has on many occasions suggested an urgent need for the budget funding amount to be better-targeted and well-focused to help maximize its effectiveness and impact on the socio-economic development of Ghana.

On the sidelines of a media training programme on oil, gas and mining in Accra last October, Professor Paul Kingsley Buah Bassuah, Chairman of PIAC, in an interview with LUV BIZ, emphasized the need for a national dialogue on how best to derive maximum benefit from oil money.

The Ghana Association for Energy Economics, an affiliate of the International Association for Energy Economics, has therefore earmarked a broader stakeholder meeting for better understanding.

Joshua Sarpong Kumankumah, President of the Association, says it is imperative to de-couple politics from policy implementation.

“Politics must be dissociated from implementing policies in the oil and gas sector, especially, with the management of the revenue”, he said.

The association, earlier this month, held a poster competition on energy modeling to find best ways to address some of these challenges in the sector.

Six students took part in the modeling competition at the KNUST, and winner received 500 US dollars as prize and an attachment package with one of the oil companies.

In as much as civil society groups have held public discussions to ascertain the impact of the oil find after five years of going commercial.

It is however important to be specific with the management of the priority areas.

Story by Prince Appiah

 

PHOTOS: African journalists schooled on the Extractive Industry in Africa

African journalists selected from East and West African countries met in Accra for a media training progamme in Oil, Gas and Mining for a period of two weeks.

Tanzanian Veteran Journalists takes journalists on mining

Trainer takes journalists through Oil revenue management

After three days of taking lessons from trainers in the classroom, it was time for the field trip.

The group divided into two-Oil and Gas group and Mining group-for the field trip.

So after four days on the field (08-11 October), we resumed the classroom session.

Journalists from Uganda, Tanzania and Ghana were taken through the in and outs of the extractive industry not only from the African setting.

We were not limited to Africa alone, Operations and activities of Mining, Oil and Gas countries in the developed world were laid bare for journalists to appreciate.

In between the lessons, journalists were reminded of how to put to effective use the journalistic skills to produce standard stories and reports.

The journalists were also exposed to a new journalistic tool and style-Data Drive-to assist in analytical reporting especially for the extractive industry where a lot of figures and year to year comparison is critical.

Preparing for Field Trip- to Obuasi, Prestea, Tarkwa and Takoradi

Discussion time with Obuasi Municipal Chief Executive, Richard Ofori-Agyemang on the mining in Obuasi.

Journalists in a pose with Municipal Chief Executive of Obuasi-Richard Ofori Agyemang Boadi after a long discussion.

Journalists meet General Secretary of Small Scale Miners Association, Rufus Borry at Obuasi.- He talks about their challenges getting concession to mine.

Civil Society Organisation
at Obuasi briefing journalists

When the bones became tired on our drive to Prestea from Obuasi.

Then to the Palace of Paramount Chief of Prestea-hemang.

Interview with chiefs of Prestea-Hemang

The Group then Visits Small Scale Miners Site where Gold is separated from Sand-in Prestea

Small Scale Miners working close to the polluted Ankobra River.

Interview with General Secretary of Concerned Citizens Association of Prestea-Dominic Nyame

Then we got to Tarkwa-Goldfields for a briefing

General Manager of Goldfields Tarkwa speaks to Journalists

We had the opportunity to see a Gold Ore

Briefing continues At Goldfields Tarkwa

Driving from the Tarkwa Goldfields briefing room to the mining concession

Trucks on concession

tractor working on concession

Tarkwa-Goldfields visit ends with Launch.

Group photo with Trainers, Facilitators and Journalists.

Training ends in group discussions

Training ends in group discussions

Training ends in group discussions

Training ends in group discussions