Tuesday, 30 January 2018

Absence of Regulations impeding our work – PIAC members

Image result for petroleum sector transparency 
Adnan Adams Mohammed

Some members of the Public Interest and Accountability Committee (PIAC) have registered their frustrations with regards to their executing their mandate of ensuring transparency and accountability in the oil sector.
The industry experts assert that the absence of Regulations relating to the Petroleum (Exploration and Production) Act, 2016 (Act 919) and the Petroleum Revenue Management Act, 2011 (Act 815) is impeding their work for the public interest.
They explained that, the absence of the Regulations hinders their ability to put to work the laws governing activities of the oil sector.
Three of the Committee members agreed that, access to certain vital information from industry regulators and players hinders them because some provisions in the Petroleum Acts are not explicit and detailed enough to empower the Committee to use legal means to access all information needed by them for their work.
A case in point is their inability to access the information about oil block contracts for scrutiny and recommendations given to guide the regulators, although the Petroleum Act 919 directs the regulator to create a petroleum register for all oil contracts signed.
“This makes it difficult to actually scrutinize or demand for certain vital information which will help make the work of PIAC elaborative”, Dr Steve Manteaw said in reaction to a concern raised by Prof. John Gatsi of the University of Cape Coast when he called on PIAC members to give details of the ExxonMobil agreement signed with Ghana.   
The Ghana government recently signed a contract with ExxonMobil Corp for oil exploration in the Deepwater Cape Three Points offshore (DWCTP) oilfield.
This adds to a growing list of oil and gas contracts that have been shielded from public scrutiny  due to the non-existence of a ‘Petroleum Register’ as required by law.
 Prof. Gatsi, an economist, said there is no excuse for why the register has not been created, two years after passage of the Petroleum Act 2016.
Image result for petroleum sector transparency

The petroleum register, he explained, is an accountability check and a pointer of disclosure and transparency; and not putting it in place would mean that details of contracts such as the one signed with ExxonMobil might not be disclosed to the public.

During a presentation at a forum for members of the Institute of Finance and Economic Journalists (IFEJ) to review and interrogate PIAC’s 2017 Half-Year Annual Report organized by PIAC, GIZ and IFEJ at Koforidua, Prof. Gatsi noted that there cannot be effective petroleum management if citizens are not active in demanding accountability.

He therefore urged government and the Petroleum Commission to ensure that the register is put in place.

He said this should be done in addition to the other regulation that is needed for the enhanced enforcement of the entire (Exploration and Production) Act 919, as Ghana continues to expand its petroleum activities.

The Act states that: “The Commission shall establish and maintain a register of petroleum agreements, licences, permits, and authorisations as prescribed”.

He said accountability is such that there are demand and supply aspects, in view of which he charged Ghanaians to hold duty-bearers accountable for effective utilisation and management of the country’s petroleum resources.

The nature of the ExxonMobil contract negotiation has led to calls for the contract to be made available to the public.
Some industry experts fear the full details of the agreement will not be made public, since the register of petroleum contracts has not been created for Ghanaians to know and understand the terms under which the agreement was signed as well as the benefits thereof.
Meanwhile, Energy Minister Boakye Agyarko, speaking at the signing of the ExxonMobil agreement last week, described it as one of the best  based on lessons from the country’s past ten years of producing oil.

The contract was signed following a direct negotiation between Ghana and Exxon Mobil without an open competitive tender.

But, Dr Manteaw, is urging the government to make a full disclosure of the details of the petroleum agreement between Ghana and ExxonMobil.
According to him, because the government entered into the agreement on behalf of Ghanaians, it is necessary for the details to be made public.

Section 10 (3) of the E&P Act, Act 919 (2016) on petroleum agreement states, “A petroleum agreement shall only be entered into after an open, transparent and competitive public tender process.”
 Section 10 (9) of the same Act states, “Despite subsection 3, the Minister may, in consultation with the Commission, determine that a petroleum agreement may be entered into by direct negotiations without public tender, where direct negotiations represent the most efficient manner to achieve optimal exploration, development and production of petroleum resources in a defined area.”

Again, Section 56 (1) of the Act states, “The Commission shall establish and maintain a register of petroleum agreements, licenses, permits and authorization as prescribed and 56 (2) states further, “The register shall be open to the public.”

 “In spite of the transparency provisions we have in the E&P law, Act 919 (2016), we are still behaving in an opaque manner in the negotiation of contracts.  The direct negotiations carried out between the government and ExxonMobil have been somewhat opaque and as we speak we don’t know our paid interest, we also don’t know what our royalty levels negotiated.
 “The contract that has been negotiated between Ghana and ExxonMobil was negotiated in the name of the people of the Republic of Ghana and therefore they deserve to know what has been negotiated in their name,” Dr Manteaw observed.

According to him, the government did not follow the E&P Act, Act 919 (2016) in negotiating the petroleum agreement with ExxonMobil before granting the license to the oil company to operate at ultra-deepwater located at the Jubilee Oil Field.

Before the passage of the E&P Act, Act 919 (2016) Ghana operated under the Provisional National Defense Council (PNDC) Law 84 and licenses and permits were carried out under an open-door negotiated deal.

“We decided to do what the whole world does and so passed that law as it moved us from direct negotiations to open competitive bidding. The E& P Act, Act 919 (2016) was not followed by the government in the ExxonMobil Petroleum Agreement,” he said.

The government, before awarding the contract, put out a contract notice that touted the expertise, track record, technological acumen, financial capacity of ExxonMobil but the PIAC member said, “these necessarily do not suggest that Ghana would get the best offer from the company. It is when such agreements are pitched against similar companies such as BP, Shell and the Chinese oil giants among others that the country will obtain the best deal.”

Dr Manteaw advised governments to desist from cajoling investors into the country’s oil fields.

  “At the early stages of our oil discovery, because we did not know what we had, it was really difficult to attract investment so we cajoled companies, gave them very attractive incentives for them to come in.
But having made a discovery suddenly, we have de-risked the area so we need not cajole them any longer and that is why in passing law 919, we provided that as a default position the way we issue licenses is open competitive bidding so the government can get a good deal.

Among the merits of open competitive bidding include preventing the abuse of use of discretion as well as helps to secure optimum contractual outcome for the country vis-à-vis technical and financial capacity of whoever wins the contract.