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DO NOT PASS THE
PETROLEUM EXPLORATION AND PRODUCTION BILL…
Dr. Raymond Akongburo
ATUGUBA
atugubaatuguba@yahoo.com
August 02, 2016
The Petroleum Bill currently
being rushed through Parliament is one of the worst
things that could happen to Ghana at this point in time.
Unless Parliament takes very drastic steps now to stall
the passage of the Bill, Ghana would lose a historic
opportunity to end the predatory and practically
terroristic attacks on our Policy Space; stop the
pillage of our natural resources; stabilise our
macro-economy once and for all; and realize the benefits
of real, genuine and productive livelihoods, good
healthcare, happy and secure families, and boundless
opportunities for all.
Since
the discovery of oil in commercial quantities, Ghana has
adopted the Royalty-Tax System (re-shaped into what is
called the “Ghana Hybrid System”) as the mechanism for
benefitting from her oil resources. This system is
skewed towards the collection of taxes from oil
companies. All progressive “Third World” Developing
Countries with Oil and Gas reserves are moving away from
this predatory system, not least because empirical
evidence and experience have established that it is near
impossible for countries that cannot collect taxes from
petty traders living in-country, to collect the
requisite taxes from multinational oil companies with
complicated and tax evading and tax avoiding structures
and systems. Yet it is this discredited system that is
contained in the Petroleum Bill currently before our
Parliament.
Currently before Parliament are other very critical
Bills. These deal with managing the governmental
transition after the 2016 elections; the right to
information; property rights of spouses; and many others
crying for attention, some for up to 10 years. Yet,
Parliament has prioritised over these the Petroleum Bill
that was re-laid in Parliament last month. Already,
Parliament has done for this Bill the first reading;
referred it to the Committee on Mines and Energy; had
the Committee on Mines and Energy meet severally over
the Bill; met stakeholders over the Bill; completed a
report on the Bill; laid the report before the entire
Parliament; had Parliament accept the report; undertaken
the second reading; held winnowing sessions on the Bill
in order to streamline the many amendments proposed; and
started the Consideration Stage for the Bill leading up
to the Third and final Reading and Passage of the Bill
into law! Actually, but for a hitch or two, the Bill
could have been passed into law last week! How efficient
of Parliament.
The
Principal reason why Parliament is in a mad rush to pass
the Petroleum Bill, actively urged on by mostly foreign
interests, and supported by their local agents, is
because they do not want to risk having to do an
in-depth consideration of three (3) sets of public
challenges that are coming up whilst the Bill is
festering in Parliament.
First,
there is a real sense that individual members of
Parliament, deep down their hearts, are opposed to the
Bill. MPs have previously proposed amendments to
literally every substantive provision in the Bill, a
very unusual scenario in Parliament. When the Bill was
first laid, over 100 amendments were proposed, affecting
all substantive clauses. Even after it was withdrawn,
reworked and re-laid recently, 45 new amendments were
proposed by MPs. When amendments are this many it is
indicative of a tacit rejection of the Bill by
Parliament. No wonder the Bill had to be withdrawn some
two times after many years on the burner and finally
re-laid in Parliament with some cosmetic changes, which
changes in most cases greatly exacerbated the bad
conditions of the Bills that were withdrawn in the first
place.
The
reason why the Bill still faces about 50 proposed
amendments is simple: the reworking of the Bill in its
2016 re-incarnation did not address the policy change
that is mandated by the full effect of the array of
amendments proposed by MPs themselves and the
requirements of existing laws, not to mention those of
Think Tanks and CSOs.
The
second reason why the Petroleum Bill is being rushed
through Parliament is that the Executive and Parliament
do not want to be confronted with the set of critical
principles in the report of the Constitution Review
Commission and the Government White Paper that are meant
to ensure that Ghana’s natural resources actually
benefit Ghanaians and that, going forward, those
resources are treated in a manner that aids our
developmental march forward.
After many years of research,
country-wide consultations, diaspora consultations,
consultations with Parliament itself, and international
comparative analyses, the Commission teased out these
cardinal principles which were accepted by government in
a White Paper. It is, therefore, policy incongruity for
the Executive and Parliament to completely ignore those
principles in its consideration of the Petroleum Bill.
Third
and finally, Parliament is rushing the Bill because she
does not seem to want to do what it must do for Ghana,
for us, for our children, and for our children’s
children, to the third and fourth generations and
forever, that is, adopt for Ghana the Production Sharing
formula for the distribution of Oil revenues and
benefits. Simply, the Production Sharing formula
operates along the lines of share cropping in
agriculture, where the owner of the land grants a farmer
the right to grow crops on his or her land, and shares
in the proceeds with the farmer according to agreed
proportions after the harvest. As the name implies,
Production Sharing focuses on the sharing of the output
of Oil and Gas produced in agreed proportions between
the oil companies and Ghana.
If Ghana had adopted this
formula for the recent oil find, she would have earned
over US $9 billion from her Oil resources between
2010-2015, representing 60% of total production revenue
of over US $15 billion. Compare this to the paltry US $3
billion earned over the same period, representing 19.4%
of total production revenue. This is the point GIGS,
joined by the FTOS-PSA Ghana Campaign, have been making
to the Committee for several years. Sadly, Parliament
has been fed, and is in turn feeding the public with
other figures and arguments to the effect that the cash
receipts under the so-called “Ghana Hybrid System” and
under Production Sharing are the same. This is
absolutely not true.
In
this regard, we need to pose a few questions to
Parliament:
1. Are
they talking of mere cash receipts or the monetary value
of all incomes and benefits that accrue to oil companies
and their mother countries on the one hand, and to Ghana
on the other?
2. Do
the cost of production figures they have been fed take
adequate account of inflated prices and especially
sophisticated transfer pricing mechanisms used by the
oil companies?
3.
Have the figures been discounted for political, economic
and social costs of drilling oil in commercial
quantities in Ghana?
From
the analyses above, if we had adopted the Production
Sharing mechanism, the current government would not have
needed to contract so many loans to finance development
projects. In fact, all the financing for all the
development projects Ghana has undertaken in the last
few years would have come from oil resources, even with
the recent slump in oil prices, effectively weaning
Ghana of development aid and marauding financiers.
The above fact is what is so
scary to many who want the current Bill passed into law.
They cannot imagine and cannot live with a Ghana which
is truly independent of loans, the IMF, the World Bank,
Development Partners and the predatory and terroristic
attacks on Ghana’s policy space that comes with them.
The
policy of Production Sharing is the thing now! All
serious and progressive countries, and even some
not-too-serious and progressive ones have opted or are
opting for Production Sharing. Togo, Sierra-Leone,
Liberia, Cote d’Ivoire, Senegal, Republic of Benin,
Niger, Mauritania, Uganda, Kenya, Tanzania, Madagascar,
Eritrea, Somaliland and South Sudan - have all opted for
Production Sharing, following in the footsteps of the
older oil producing countries: Nigeria, Angola, Libya,
Egypt, Gabon, Chad and others.
We hear that the Consideration
Stage of the Bill is now scheduled for October this
year. Before that date, we will work to produce a
detailed brief for distribution to all MPs as to why
they must use this opportunity to save Ghana by writing
the Production Sharing mechanism into the Petroleum Bill
or in the alternative, not pass the current Bill.
Our Dear MPs…
Listen
to your hearts…
Do not
listen to your heads, chests, stomachs, hands, feet…
And do
the right thing for yourselves, for your children and
for Ghana….
Otherwise we will be constrained to vote you out…
We
need every Ghanaian to commit today that any MP who
votes in favour of the current monstrous and
unprogressive Petroleum Bill in Parliament will not be
returned to Parliament come 7th November or 7th
December, and definitely come 7th January.
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