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It's Official: Petroleum Commission’s Hybrid System is
a Rotten "Tuo-Zaafi" Fiscal Proverb!
By: Prof Lungu
March 11, 2016
"...According
to the Ghana Petroleum
Commission, Ghana can "achieve" the same oil revenue using any
"fiscal regime", (Ghana Hybrid System, PSA, Concession, or
Joint Venture). But, a Joint Venture is merely a political
strategy, and it was directly the hopelessness of concession
type agreements that spurred Malaysia to develop the PSA to
better ensure Malaysia received a fair share of its oil
revenues, in 1976...We, of the FTOS-Gh/PSA Petition/Campaign,
recognize the Petroleum Commission's fallacious position as
analogous to the Ghanaian case of a rotten "Tuo-Zaafi" fiscal
proverb...(Prof Lungu, 8 Mar 16).
Recently,
on 20th February to be exact, an official meeting was held in
Ada, Greater Accra Region, to account for the means for
collecting money for Ghana's oil. As far as we know, the
meeting was called to precisely discuss the wisdom in Ghana
continuing with the so-called "Hybrid System" as the
government-approved "fiscal regime" to collect as much of the
money due Ghana for Jubilee Oil, and others that will come up
the line. The "Ghana Hybrid System" is to be compared and
contrasted with the world standard Production Sharing
Agreement (PSA) advocated by members of the Fair-Trade Oil
Share Ghana (FTOS-Gh/PSA) Petition/Campaign.
The 20 February meeting was attended by several Members of
Parliament, leadership and staff of the Petroleum Commission,
members of the Ghana United Nations Association (GUNA) Board,
and the Ghana Institute for Governance and Security (GIGS), as
representative of the Fair-Trade Oil Share-Gh (FTOS-Gh/PSA)
Petition/Campaign.
During
the meeting, the Petroleum Commission presented a somewhat
confusing 48-page PowerPoint slide to support their idea that
the so-called "Ghana Hybrid System" is superior to a PSA
fiscal regime. Following a de-brief, the FTOS-Gh Team provided
an initial response to the Petroleum Commission, Part
I,
on 26 Feb. Further, in the interest of improving
communications and widely circulating information about the
Ghana Oil money impasse, we completed our Part II response and
posted the papers (PDF and Slide Show) onhttp://ghanahero.com/FTOS_GH_Campaign.html.
Finally, just yesterday, we posted slides from the Part II to
Twitter (https://twitter.com/professorlungu).
In this mini paper and others that will follow on this item,
we will focus on just one aspect of our response to the PC for
the benefit of readers on other online platforms. It is part
of our continuing effort to bring this very technical subject
to a level the average person can understand. Hopefully, as we
continue to make the case for the PSA and focus more on the
true world standard for collecting oil money due a country,
this will help everyone make their own decision about the
choice between the world standard (PSA), versus the so-called
Ghana Hybrid (a system derived by some Ghanaians that is a
mish-mash of several ideas without coherence, a system missing
the more fundamental elements of a PSA, a system that has
caused Ghana to lose over $6 billion during the last five
years.
According to the Ghana Petroleum
Commission, Ghana can achieve the same revenue using any
"fiscal regime", (Hybrid, PSA, Concession, or Joint Venture).
But, it was directly the hopelessness of concession type
agreements that spurred Malaysia to develop the PSA to better
ensure Malaysia received a fair share of its oil revenues, in
1976. Critically, a Joint Venture (JV) is merely a political
strategy without any resource naturally at bottom begging for
answers to a million questions!
So, in summary, the claim by the Petroleum Commission that
Ghana can achieve the same income by whatever fiscal regime it
adopts is an arcane and preposterous idea. That idea appears
to have been borrowed from an insignificant section of the
literature on Oil and Gas fiscal regimes.
That fair weather oil income idea is at once unintelligent and
contrary to the interests of a sovereign state that actually
owns the oil within its borders. In fact, it is precisely the
kind of idea that tend to be advanced by entities that do not
directly own the resource (e.g. World Bank, arm-chair
academicians, policy and political elites, oil lobbyists, and
non-profit organizations funded by other countries and
interests, etc.), by those who do not hold that type of
resource in trust for others.
The suggestion that Ghana can achieve the same income from oil
by whatever fiscal regime it adopts actually channels the Wachtler
Ham-Sandwich proverb. According
to that proverb, in front of a Grand Jury, a prosecutor can
indict even a "Ham Sandwich", to same and equal effect.
We, of the FTOS-Gh/PSA Petition/Campaign recognize the
Petroleum Commission's fallacious position as analogous to the
Ghanaian case of a "Tuo-Zaafi" fiscal proverb.
Yes, the
"Tuo-Zaafi" fiscal system will
also bloat and yield the same result, to same effect. Just
make sure you demand "Royalties" and "Taxes", and adjust the
books according to quantity of oil reported to you as lifted,
then normalize all of that with the price of oil on the
market.
The Petroleum Commission is in essence arguing that there was
absolutely no need for Malaysia to develop the PSA fiscal
regime for its sovereign oil and gas.
But the entire world knows
the answer to that question. In fact, according to our
records, 1 country shy of 100 (99 countries), have in fact
adopted the PSA. But, the foreign oil companies in those
countries have not vacated the oil fields because those
countries elected to adopt the PSA as the first step, and best
fiscal system, through which they intend to get their fair
share of their depleteable oil resources.
In short, from the start, compared to all the others, the PSA
is the “Better Mouse Trap” invented for sovereign oil,
barrel-by-barrel.
THE FTOS-GH/PSA DEMAND: Withdraw and remove the Ghana Hybrid
System-infested Petroleum Exploration and Production (E&P)
from the Parliament of Ghana. Replace
with world standard Petroleum Sharing Agreement (PSA)
provisions and demonstrate good faith, responsible
stewardship, and trusteeship of Ghana's Oil and Gas, for Kwame
Nkrumah's Ghana.
Get with the program, Ghana Petroleum Commission!
(In Part 2 of this mini paper series, we will take up the
matter of large sums of money paid to several entities in
Ghana, entities that nonetheless are performing as "gatekeepers"
with respect to the decision by Ghana to adopt the PSA vs. the
so-called Ghana Hybrid System).
FTOS-Gh Interest Items:
1. Fair-Trade
Oil Share-Ghana (FTOS-GH/PSA Petition/Campaign):
Read about it, join it, sign it: https://www.change.org/p/ghana-fair-trade-oil-share-psa-campaign-ftos-gh-psa).
2. http://www.GhanaHero.Com/FTOS_Gh_Campaign for
more information.
(Join the action! Read mo! Listen mo! See mo! Reflect mo!).
Prof Lungu /GIGS/ANON/GUNA/FTOS-Gh/PSA/
©Prof Lungu is Ghana-Centered/Ghana-Proud.
Subj: It's
Official: Petroleum Commission’s Hybrid System is a Rotten
"Tuo-Zaafi" Fiscal Proverb!
Brought to you courtesy www.GhanaHero.com©11 Mar 16.
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