Ghana and its Oil and Gas Fiscal Regimes: A Case of Bad Deals Signed



Article 257 Clause 6 of the 1992 Constitution of the Republic of Ghana states that “every mineral in its natural state in, under or upon any land in Ghana, rivers, water course throughout Ghana, the exclusive economic zone any area covered by the territorial sea or continental shelf is the property of the Republic of Ghana and shall be vested in the President on behalf of, and in trust for the people of Ghana.” This simply means that Ghanaians are the sovereign owners of the natural and mineral resources, and for that matter must derive maximum benefits from their exploitation no matter who exploits them.






But after losing to mining companies for over 150 years of modern mineral production (not to mention the almost 500 years of looting, theft, pillage and plunder), Ghana is on its way to lose again on its new found oil and gas, because of bad oil and gas deals or contracts it entered into with Foreign oil Companies (FOCs.)

After almost ten years of oil and gas production, Ghana has received less than 20% of total production as government take. This is just unheard of, unacceptable and unbelievable in the 21st century order of things. This is total madness in the midst of plenty information governing the oil and gas sector across the world, where BEST PRACTICES and STRATEGIC NEGOTIATING SKILLS abound. Currently, oil and gas fiscal regimes in Ghana are Concession Agreements : royalties to the state, company tax and additional entitlement as the case may be. This fiscal arrangement has not profited Ghana all these ten years of oil and gas production. Why? Because Ghanaian leaders failed to negotiate good terms and rate under the concession agreements. It is a great failure from our leaders and this has set a very bad precedent till date.

Ghana is on her way to losing again on her new found resource to the old Trojan horse, the imperialist now masquerading as an INVESTOR, but truly the neocolonialist, the same capitalist from the old West, the greatest enemy of Africa for 500 years, whose major goal and desire is to seek and promote its SOLE interests. Period!

Forget about those mental ‘poisons, toxins and venoms’ and lame arguments that the gullible people throw at us saying that “the sector is risky, capital intensive, technology-based, demands for experience and expertise, etc.” Folks, all those things cost “how much” and for “how long” compared to the value of the resources underground? After all, don’t they (Foreign oil companies- FOCs) recover the cost in about five years and make handsome returns on investments? Return on Investments (ROIs) of 25-40%, is it not handsome for the FOCs? If not, then, it is no more business or investment; it is rather pillage, plunder, predation and looting through the “Looting Machine,” as Tom Burgis called it. Could they have made those returns if they had kept all those investments home in their bank accounts? Of course, not!

Some also argue that the resources while underground have no economic value. That’s another lie being thrown at gullible Ghanaians. If the resources underground have no economic value, why do investors leave their home countries, wives, children, bring capital (human, technological, infrastructural, etc) and come to Ghana to prospect for the resources that they claim have no economic value? This argument is not tenable and should be discarded. Ghanaians are being slaughtered every day on the altar of oil and gas deals which yield little to nothing to the citizens, the sovereign owners of the resources. Who will save Ghana from the pains and pangs of being inflicted everyday on vulnerable Ghanaians in the name of Foreign Direct Investments (FDIs)?

Please, don’t misunderstand me. This is the new thinking, the new wave of approaches that CAN only make Ghana, and for that matter Africa, to derive the maximum benefits from its Extractive Industries. Anything short of that will spell CONTINUAL GRINDING POVERTY, DOOM AND NEEDLESS DEATHS once again for Africans in the 21st century. Is that how Ghanaians are going to derive the maximum benefits from the oil and gas resources God has freely given to them in the 21st century, the century of knowledge and best practices?

After almost ten years of oil and gas production in Ghana, what a sorry state we are in! Something has definitely gone wrong. Never again, should we make such a mistake in any of our mineral deal. Generations after us will never forgive. We must learn our lessons from our forerunners such as Indonesia, Angola, Equatorial Guinea, Nigeria, Norway, Saudi Arabia, Libya, Algeria, etc. And newcomers like Uganda, Kenya, Tanzania, Chad, Togo and Mauretania which are all signing Production Sharing Agreements. We cannot and do not need to reinvent the wheels with an obnoxious law like Act 919 which sanctifies illegal, bad laws proactively. We just must learn how others have done it right. History will not forgive our leaders who have freely given away our natural resources for naught. Our development as a nation hinges on such deals we sign. Mention can be made of Australia, Libya, Angola, Equatorial Guinea, Cuba, Brazil, etc. who have made good deals on their mineral resources. We can change the narrative. It’s possible. The greedy leaders must be shaken up to wake up by the citizens. Time to derive full and maximum benefits from our resources is here. Let’s do it for once. History will reckon with us. Let’s do it for generations unborn. Ghana needs to derive the very best from its natural resources. We cannot be beggars in the midst of plenty. Be a citizen, not a spectator! Be a citizen, not a subject!

The Institute of Economic Affairs (IEA) has revealed that Ghana’s natural resources including gold, oil, gas bauxite, manganese and iron ore are worth over $12 trillion.

http://www.myjoyonline.com/business/2019/november-19th/ghanas-natural-resources-deposit-is-worth-12-trillion-iea-reveals.php

For over 120 years, Ghana has given its natural resources exploitation to foreigners through obnoxious, predatory, imperialist, colonialist, neo-colonialist contract deals in the name of foreign direct investments by these pillaging, plundering, and predatory multinationals. Today, Ghana has become a very attractive oil and gas frontier to foreign investors because of sweet and juicy contracts that are freely given out to these foreign companies that are taking almost all the revenues away, giving us crumbs which the politicians, bureaucrats and technocrats also sharing a lot among themselves to the detriment of the 30 million people whose socio-economic lives have never improved since independence. PIAC is only making hollow noise about prosecuting people.

Oh, Ghana! Up to when will you fulfill the dreams and aspirations of the founding fathers, by being the true BLACK STAR of Africa, taking the commanding heights of your natural resources for the socio-economic development of your sons and daughters?

Let Ghanaians rise up and pressurise for the right things to be done by the leaders they have been voting for and, by so doing, derive the maximum benefits from our natural resources.

I will quote only two references to support my points.

“Fiscal regimes for the Extractive Industries (EI) vary greatly, a wide range of instruments being used. The paper attempts to gauge how current regimes share rents between government and investor. Data analyzed here suggest that in mining, governments commonly retain one-third or rather more; simulations suggest higher government shares (40–60 percent), but do not capture all possible sources of revenue erosion. They also suggest that the government share is higher in petroleum: around 65–85 percent. Fiscal regimes that raise less than these benchmark averages may be cause for concern, or—where agreements cannot reasonably be changed— regret.”

Another:
“Ghana’s petroleum fiscal regime should be reformed to ensure maximum long-term revenue generation, even if the state is not fiscally dependent on oil revenue. Much of the regime is currently formulated to attract investment to a young industry. Given the long resource horizons of its newly discovered reserves, Ghana is in a position to enact measures that will ensure long-term revenue stability. These measures should account for the government’s changing financial position, and the fluctuations in oil prices. The regime can also achieve greater take by increasing the state’s share in production sharing agreements.”

  • Sara Zedingle Ghebremusse (2014), Assessing the Petroleum Fiscal Regimes of Nigeria, Ghana, and Cameroon, published thesis for a Master of Laws, Faculty of Law, University of Toronto.

Unfortunately, both the leaders of the NPP and NDC regimes, for the 2-5% shares they have been negotiating for themselves as local investors, often hiding behind surrogates, have been literally handing over our finite oil and gas resources to foreigners using a pack of lies and dubious rationalizations to dupe the unsuspecting public of a fair share of what is due them. When are the lucky to be educated Ghanaians with conscience going to wake up and lead the less privileged to take their own destinies into hands?

Joel Degue (joeldegue@gmail.com)
Resource Development Expert/Consultant,
Founding Member/Secretary, Centre for Natural Resources and Environmental Management (CNREM)

www.cnrem.org

JOEL DEGUE

JOEL DEGUE, © 2020

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