Ghana Moves To Reform Oil Industry

Ghana Has Moved To Open Up Its Oil Industry To Encourage Investment And Boost Government Revenues. Kwawe Ampofo, The Energy Commission’s Chairperson, Said The Move To Liberalise The Allocation Of Oil Blocks Would Also Ensure Transparency In The Industry.

In the past critics have raised concerns about bottlenecks in the issuing of prospecting and exploration rights in the West African country’s oil industry.
Ampofo told The Africa Report that under the old dispensation an Energy minister had sweeping powers that discouraged competitive bidding, transparency and maximum revenue generation.
He said the new oil and gas policy unveiled by the ruling National Democratic Congress party would open oil block allocations to competent investors. “The critical difference is that the way that the oil blocks are being given, the minister has too much power to open up a block and allocate,” he said. “I am saying that that allocation must be subjected to more scrutiny and transparency and everything.” 
He said the new policy seeks to bind the Energy minister to declare oil blocks and allocate them through after competitive bidding process. Ampofo said this would attract more companies into the oil sector; ensure efficiency and revenue generation for development of the country. “You know you just don’t go to sit with one company who come to see you Nicodemously, then it is ok, I have given you the block”.
“The blocks must be declared so that every citizen knows about it, and those who want can also to come and bid.
“The point is that they actually come and bid competitively, so five to eight companies are bidding for one block and so we talk about more revenue –royalties’ percentages will rise, at the end of the day Ghana will be the winner.”
Last week four political parties namely Convention People’s Party, National Democratic Congress, New Patriotic Party and People’s National Convention unveiled their policy positions on the oil sector.
The policy positions proposed the adoption of a non-partisan approach to the appointment of board members, the need for legislation on contractual disclosure, the role of National Commission for Civic Education, public education on oil and gas legislation, and the role of the Ghana National Petroleum Corporation in the industry.
“One major problem is the absence of an open tendering or bidding process to acquire prospecting or exploration rights,” Centre for Democratic governance (CDD-Ghana) said in a research report published in 2015.
The open bidding method in the form of auctions, the centre said is the most preferred, in the West African country. However, it added that “the current licensing regime is predominantly one of a closed-door negotiated deal approach.”
“The government negotiates in private with interest parties and information on the process is not generally disclosed.”
Analysts say the opaque administrative process in Ghana’s oil industry is against international best practices since it opens up avenues for to corruption, bribery and tax evasion.
“Opacity remains a challenge due to the fact that there is currently no law that demands full disclosure of information relating to the negotiation and award of contracts in the energy [sector],” an analyst said.
Ampofo said there was need for policymakers to create the required policy and institutional mechanisms by passing the country’s Right to Information Bill into law to guarantee full disclosure of contract information on oil and gas sector management.


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