Ghana’s Petroleum Exploration and Production Law Act 919 in Retrospect (Part 2)

“An Exploitative and Economic Slavery Law and Conspiracy against Ghanaians”

“Imagine what Africa will look like when it has fully tapped into its potential. But Africa and its partners will miss the opportunity to transform the lives of future as well as present generations if they carry on with business as usual….Tax avoidance and opaque business practices block Africa’s extractives sector too. Africa’s natural resources’ wealth rights belongs to the continent’s citizens, but these citizens are being robbed of its benefits by revenue diversion, corruption, jobless growth and rising inequality’,” Kofi Annan, Geneva, September, 2013).

As Dr. Peter Eigen, founder of Transparency International observed, the World Bank and Western European governments do not see anything wrong with the multinational companies engaged in the extractive industries’ sector paying tens of millions of dollars into private accounts overseas to secure bad agreements, contracts and laws in their favour, (DW TV Journal Interview, December 31, 2013).

In a paper titled from “Concession to Service Contract” by Ernest E. Smith in Tulsa Law Review Vol. 27, Issue 4, International Energy Law Symposium 1993, Modern Concession (Hybrid System) contracts are characterized and subject to undue influences and corruption. That is exactly what is happening in Ghana as stated categorically by Dr. Adam Amin, past Executive Director of ACEP, now the Deputy Minister of Mines and Energy in a presentation to the US Congress Sub-Committee on Africa, Global Health, Global Human Rights and International Organization, on July 18, 2013, on the topic ’’Is there an African Resource Curse? “

In concluding his presentation he said; “…I have already mentioned the issue of bad deals in the oil and mining industries. Some of these bad deals have already been producing resources and the United States like other importing countries is consuming oil from some of these bad contracts. This places an important responsibility on the United States to lead by example in ensuring that oil and minerals from countries that promote questionable contracts tinted with corruption are not patronized….”

It is therefore surprising, painful, sad and shameful that of Ghana’s Parliament has passed this exploitative, predatory and obnoxious piece of law, Act 919, under a Certificate of Urgency almost at midnight of August 4, 2016 to legalize corruption and perpetuate the unbridled robbery of Ghanaians of their sovereign wealth rights in the name of attracting investment, the very thing Mr Annan complained about.

Without mincing words, we are aware that The World Bank, Oxfam America, STAR Ghana, DFID, NRGI and others were actively behind the passage of this slavery-era Petroleum Exploration and Production Law (ACT 919) meant to rob Ghanaians of their oil wealth in the name of attracting foreign investment into the country, in favour of Western Europe’s vested interests in collaboration with their local patrons.

We, members of FTOS-PSA Campaign Team are not against investments nor do we think Ghanaians expect favours from any oil company. We believe however that Ghanaians expect and stand for ethical investments governed by fairness and equity in sharing revenue from sovereign Ghana’s natural resources. That should be the basis of our national development and transformation that Annan highlighted above.

We find ourselves in a bizarre and abysmal state of affairs after 60 years of independence; that our developmental and socio-economic policies are still being dictated from Washington, London, Paris e.t.c most especially as the decisions taken in those capitals in the long run do not inure to we citizens but rather to foreigners and their local agents, mostly the political leadership and the elite technocrats.

1. It is now established and without any contradiction or doubts that PNDCL 64 and 84 which formed the legal framework for managing the upstream oil industry before the discovery of oil in commercial quantities in 2007 supported PSA (Ref. UK Law Student Review, January, 2014, Volume 2, Issue 1).

2. That the basis of these two laws were crafted and modelled to represent the most progressive, equitable and a fair fiscal regime for sharing petroleum revenue in this 21^st Century between a host government and the foreign oil company (contractor). All 34 upstream oil producing countries in Africa have adopted it.
3. The model PSA of 1995 between the Ghana Government, Ghana National Petroleum Corporation, GNPC and the Contractor was based on PNDCL 64 and 84.
4. Records available at the Oxford Institute of Energy Studies and Barrow Company Inc. indicated earlier agreements entered into by Ghana in the 1990s were based on the two One of such contracts is the “Production Sharing Contract between the Government of Ghana, GNPC and Santa FE Energy Resources of Ghana in respect of a block onshore and offshore KETA Basin” dated June 25,
5. In a post to Ernest Agyepong on Saturday, January 30, 2016 at 1:45am, a supporter of the Hybrid System by Mr. Kwame Mfodwo copied to the Ghana Leadership Forum, Okyeame Forum, The Statesman, The Daily Guide and The Insight newspapers, Mr Seth Terkper, Mr. Ekwow Spio Garbrah, Kwame Mfodwo vouched: “I can back the claim that the original Ghana Petroleum Agreements were Production Sharing Agreements. I was one of a team of people who provided many worldwide examples that provided the basis ‘for these agreements to be put together by Mr Tsatsu Tsikata (a one-time chief executive officer of GNPC) in the 1980s”.
6. Contrary to the existing PNDC laws, all agreements and contracts entered into by the previous NPP and NDC governments and approved by Parliament from year 2000 have been modelled after the Royalty Tax/Hybrid System laws which were not in existence on our statute books.
7. That since all the agreements were not in conformity with the tenets of the two laws which supported the PSA, senior officials of the Ministry of Mines and Energy launched a spirited campaign to demonize PNDCL 84. ACEP spearheaded the campaign, leading the 135 civil society organisations, CSO, under the Oil and Gas Platform set up by the World Bank and Oxfam America throughout Ghana except the Volta Region a year after the discovery of oil and gas in commercial quantities. Organisations like IEA, IMANI Africa, KASA and others vehemently opposed the PSA claiming the Royalty Tax/Hybrid System created a better and superior fiscal regime.
8. The Public Interest and Accountability Committee, PIAC, which was set up to have a resemblance of a legal government institution by the vested Western interests has proved to be what they wanted it to be: a distractive institution meant create intrigue and manipulate issues behind the scene to confuse Ghanaians the more so they do not ask questions. Its leadership from the entry of MajorDaniel Sowa Ablorh–Quarcoo (retd) to the current leadership have opposed the PSA, claiming the Royalty Tax/Hybrid system is a better option than PSA without providing any empirical and scientific evidence from the African continent.

All the above 135 CSOs are resourced by the World Bank, Oxfam  America, Star Ghana, DFID, Revenue Watch Institute, GIZ and oil companies through the so-called community social responsibility, CSR initiative.

10. That all the agreements and contracts were hanging in the air without any legal legs to support them despite the fact that they have been approved by Parliament.
11. That the passage of Act 919 has given retrospective legal backing to illegal agreements which were void from the beginning.

12. That the past governments and parliament erred in law. The practice of jurisprudence frowns upon this practice.
13. In a mail sent by Mr Kwame Pianim, a member of the Petroleum Commission to Dr Anthony Dotse, a supporter of PSA resident in the USA on September 3, 2016 at 7.22pm he wrote: “It took a major review tweaking of the
    oil and gas regime structured by Mr Tsikata by President Kufuor with support from Commonwealth Secretariat”. This marked the beginning of the conspiracy against Ghana and Ghanaians.
14. The implication of this act was the reversal of the PSA Oil & Gas regime structure designed by Mr Tsikata that would have guaranteed an equitable and fair share of the oil revenue to Ghana, to the revenue losing Royalty Tax System under the wrong notion of creating a conducive climate to attract foreign investment into the sector. That singular act has made Ghana lose the colossal amount of almost U$10 billion as at the end of 2018.
15. That in the estimation of the PSA Campaign Team, Ghana is on the way of losing over US$50 billion at the end of the production life of the Jubilee Fields which holds close to three billion barrels of oil alone.
16. In another mail from Mr. Pianim to Dr. Dotse on October 17, 2016 at 3.50pm he wrote: “Let us be clear what my position is: I am for the introduction of PSA. The fact that the Ghana system has been under adjustment from the Royalty based system to some Hybrid System should be evidence enough that it is inferior to a properly structured and implemented PSA”.
17. Our first question is, if Mr. Pianim knew that the PSA is a superior fiscal regime, why should the Petroleum Commission, joined by the Ministry of Mines and Energy, GNPC, ACEP, the CSO Platform on Oil & Gas and other think tanks, oppose the introduction of the PSA fiscal regime into the new Petroleum Exploration and Production Law, Act 919?
18. Our next question is: what is peculiar about Ghana’s upstream oil industry that she cannot adopt the PSA, while countries with lesser stature and status than her on the African continent have adopted it? For example, Togo, Chad, Mali, Niger, Eritrea, Republic of Benin, Sierra Leon, Liberia and South Sudan started with PSA. There was no question of de-risking. Did Kenya, Uganda, Tanzania and Senegal de-risk before adopting PSA?
19. Are their political leaders and technocrats in charge of their oil and gas sectors better educated, learned and well informed than their counterparts in Ghana? Tullow and KOSMOS have signed PSAs with almost all the newly emerging countries into the upstream oil industry in Africa except WHY?
20. What are the motivating factors that influenced our political leaders and the  technocrats in resisting and opposing the adoption of PSA in Ghana when they are aware the PSA would accrue more than 50% of total production revenue to Ghanaians as against the Royalty Tax/Hybrid System which would accrue less than 25% of total production revenue?

‘‘Unlike the concessionary system, where a sovereign nation often transfers its ownership of the resource to the licensee and mostly gets less than 25% of total revenue accrued, the PSAs mostly vest ownership on the State and could give the country over 50% of the accrued money,” said Mr Ben Dagadu, deputy Minister of Petroleum, Graphic Business March 8th to March 14 2016

These are questions Ghanaians need answers to.

Interestingly, on January 12, 2017, Act 919 was declared “garbage” at the International Ghana Oil Conference organized by the Lada Institute in conjunction with Open Society Foundations and IBIS-Education for Development at Labadi Beach Hotel. In attendance were the following: Lucie White and Louis A. Horvitz, Professors of Law, Harvard Law School, Wilham Forbath, Associate Dean for Research and the Lloyd M. Bensten, Chair in Law all of University of Texas, School of Law, Dennis Davis, a South African judge, Professor and Social and Economic Rights Experts and Professor Raymond Atubiga of Ghana and others from Tanzania. Mr. Tsikata came around briefly and criticized some aspects of Act 919 which limits Ghana’s sovereignty and ownership rights.

Should we continue to use the Act 919 which has been declared “garbage” by eminent professors in law?

Act 919 is a conspiracy hatched in the corridors of Western powers in collaboration with a few unpatriotic Ghanaian elite technocrats and politicians against their nation. The whole thing smacks of being a fraudulent scam, akin to a 419 Royalty scheme as Nigerians will describe it, to rob Ghanaians of their sovereign oil and gas wealth in the name of investment for development; which like gold, diamonds and other minerals being exploited under the Royalty system, will never materialize unless Ghanaians receive a fair share of the proceeds to begin with.

In conclusion, ‘‘Ghana’s petroleum fiscal regime should be reformed to ensure maximum long-term revenue generation, even if the state is not fiscally dependent on the oil revenue. The regime can also achieve a greater stake by increasing the state’s share in production sharing agreements’’ (Sara Zedingle Ghebremusse, Faculty of Law Thesis, University of Toronto Canada, 2014).

By Solomon Kwawukume

The Writer Solomon Kwawukume is the Executive Director, CNREM and a former Senior Research Officer – GIGS