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17.05.2016 Feature Article

Fair-Trade Oil Share Ghana Campaign: Speech By Togbe Nakakpo Dugbaza Viii

Fair-Trade Oil Share Ghana Campaign: Speech By Togbe Nakakpo Dugbaza Viii
17.05.2016 LISTEN

SPEECH DELIVERED BY TOGBE NAKAKPO DUGBAZA VIII PARAMOUNT CHIEF OF TEFLE TRADITIONAL AREA ON THE FAIR-TRADE OIL SHARE CAMPAIGN CONFERENCE HELD ON THURSDAY, 28TH DAY OF APRIL, 2016 AT T.D.C.

CONFERENCE HALL TEMA
Imam Chairman, Your Excellencies, The Press, All invited Dignitaries, All Protocols observed Ladies and Gentlemen.

What is the essence of this Fair-Trade Oil Campaign to which we have to border you?

1. To create public awareness as to what is happening in the newly found wealth Oil and Gas sector of the economy.

2. To prevent people in entrusted office, especially in the Gas and Oil Sector, from debasing the Industry to Foreign Oil Companies.

3. To let Politicians wake up to their task and to do the proper architecture on the Oil and Gas Industry for the benefit of Ghana and Ghanaians yet unborn.

4. Any other remedy.
Ladies and Gentlemen, Ghana is blessed with one of the indispensable and most demanded commodities of the world, namely Oil and Gas. However, as a neophyte in the Oil and Gas industry we are confused as to where to start, where to go, how to go and where to stop and draw the line.

Ghana and, for that matter we, are now in a dilemma as to what agreement to stamp for the Foreign Oil Companies with which to operate. A section is saying the Concessionary or Hybrid system is suitable whilst others are proposing the Production Sharing Agreement (PSA). Either the Hybrid system or the Production Sharing Agreement, both have their challenges.

The Hybrid System is where a Sovereign Country often transfers its ownership of the resource: to the licensee and mostly gets about 25% of total revenue accrued whilst the Production Sharing Agreement (PSA) mostly vests ownership on the host state and could give a country over 50% of the accrued money.

Ladies and Gentlemen:
These are the two rival agreements that are contesting for our Oil and Gas Industry. Ghana derived $3Billion for the past 4 years from the oil sector based on the Hybrid system but proponents of the PSA says, it could have been three times if the agreement were based on the PSA system. In all this, you and I are not conversant with the Oil and Gas Industry. However, I am aware it is capital Intensive but its capital intensiveness should not compel us to spread our resource on a silver platter.

Ladies and Gentlemen, your Excellencies and invited Dignitaries:

Not knowing the future and hoping that Ghana would strike oil one day as we did, the P.N.D.C. promulgated two laws: Law 64 and Law 84. These two Laws are crafted to form the fundamentals of any future agreement that Ghana would enter into with Foreign Oil Companies. I am not in a position to delve into the integral aspects of the Laws but I am aware they are modeled in line with Production Sharing Agreements, the PSA System .

Some school of thought are contending that PNDC law 64 and 84 are outmoded. There is no bad law or order; it has to be respected until it is vacated, repealed or amended. P.N.D.C. Laws 64 and 84 are still relevant to our dilemma regarding the Oil and Gas Industry. Again, a section of the divide is arguing that, PSA are fancied by old oil producing countries.

Ladies and Gentlemen:
Am I being told that, if an old Professor uses the mathematical element of calculus to solve a problem, a new and young professor is not qualified to use same to solve a problem? If the Deputy Minister Hon. Dagadu recognizes the fact that adoption of PSA would make the country derive more than 50% of total revenue accruing from Production Sharing Agreement, then professionally, morally and ethically PSA is what he should adopt for Ghana just as the 34 countries in Africa have done.

Besides, are our neighbors in the sub-Region - Senegal, Sierra Leone, Liberia, Togo, Republic of Benin, Cote-d'Ivoire old oil producing countries that made them signed unto PSA? Are these East African countries, Kenya, Tanzania, Uganda, Ethiopia, Eretria old oil producing countries yet they have signed onto PSA? To say Ghana cannot abandon the Hybrid System because our industry is new and that PSA are fancied by old oil producing countries is false and incorrect.

New emerging countries into oil and gas all over the world are signing PSA to maximize benefit from their oil resources. Simply put, the Deputy Minister of Petroleum is saying, leadership in the 34 countries in Africa, despite their various short-comings, are wiser, more knowledgeable and patriotic than the Ghanaian. The Ministry of Petroleum, Petroleum Commission and the Select Committee on Mines and Energy should come out clear and itemize one after the other the reasons why they believe the Hybrid System or the Modern Concessionary System is good for Ghana even though they are aware the system would accrue less than 25% of total production revenue to Ghana. The Ghanaian masses are waiting for their answer.

On the statement that PSA are fancied by old oil producing countries

The Deputy Minister said we have only one producing Oil field, and therefore those who are calling for pure PSA have more than one Oil field for production. I disagree. This is not logical thinking. If you have one spade for your work, you rather have to take care of it and derive maximum benefit from the spade’s life. If we have one oil field, we have to protect it, sign a formidable agreement from which to derive the maximum benefit.

Now the Fair-Trade Oil Share-Ghana Campaign team is accused of leveling or alleging corruption among politicians and the oil companies.

On this issue of allegation of corruption, we want to say we are not the first to allege corruption. We are rather taking a cue from the Executive Director of Africa Centre for Energy Policy, Ghana, who in a testimony before a Sub-Committee of the US Congress on the topic "Is There an African Resources Curse?" on 18th July 2013 concluded in his presentation:

Quote: ‘’In conclusion, 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 State 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 tainted with corruption are not patronized’’.Unquote .

In effect the Executive Director is asking the US not to import oil from Jubilee Fields and others that would come on stream because, he believed contracts backing them are tainted with corruption. It is therefore not we who are alleging the corruption directly, in the first instance. But it is likely to happen.

On the question of PNDC Law 84, outmoded and inimical to the budding oil industry in the country, this amounts to giving a dog a bad name and hanging it.

The Law has been labeled outmoded and inimical because, the law does not support the bad deals and corruption tinted contracts and agreements so far entered into by leaders the Executive Director of ACEP complained of before the Sub-Committee of the US Congress.

The Law was crafted to suit PSA and not the Ghana Hybrid System. This meant that, all contract and agreements signed to date do not have a legal framework backing them, hence the false statement and public deceit about it. PNDC Law 84 and PNDC, Law 64 put together can be compared to the Angolan Petroleum Activities Law which is considered one of the best on the continent of Africa. The East African countries are adopting it, which nullifies the statement that every country adopts a system best suited to its peculiar circumstances as stated by the Deputy Minister per Daily Graphic Business Paper March 8-14, 2016.

Malaysians adopted the Indonesia PSA model in 1974 when faced with a similar situation; we are currently in similar situation and we can adopt PSA Systems. We therefore consider the statement by the Deputy Minister as false. We shall in our presentation discuss in detail the salient .features of the two laws to find out whether they are bad laws.

Now let me enumerate on some of the African countries and others that have signed on to PSA accord. Angola contract has the best content Law on the continent. Tullow signed comfortably the PSA with Angola, why not Ghana? 34 countries in Africa have signed the Production Sharing Accord and to mention few I say Algeria, Angola, Republic of Benin, Gabon, Libya and Liberia. Others are Morocco, Nigeria, Niger, Sudan, Namibia, Zambia and many others.

In South America, Argentina, Bolivia, Brazil, Ecuador and Peru. In Asia we have Indonesia, Malaysia, Philippines, Vietnam and others.

In Eastern Europe: We have Albania, Bulgaria, Russian, Ukraine and others. Middle East: We have Iraq, Bahrain, Jordan, Qatar and others.

"The biggest question is why is Ghana hesitating in adopting the best formula for the benefit of the country, i.e., the PSA?”

Ladies and Gentlemen; The Executive Director of African Centre for Energy Policy Ghana (ACEP) said on 18:07:2013 that, so much is happening in Ghana which many people consider a new paradigm of countries in Africa determined to break away from the resources curse. Ghana is indeed being tested and whether she will pass the test or become another victim of the curse is still an open question. What is resources curse?

Ladies and Gentlemen: Resource rich countries such as oil and mineral producing countries have been challenged by how to transform their riches to broad-based democratic development. Especially in developing countries, they are faced with problems of the quality of institutions managing these resources, the quality of investment of revenues from exploitation and the level of accountability of officials involved in the managing large inflows of cash. These countries often see their people live in abject poverty, plagued by conflicts, ignorance, illiteracy and disease in spite of their resources and wealth. This phenomenon has become known as the "resources curse". The "curse" has also been described as the ‘'paradox of plenty'’ and oil referred to as the 'devil's excrement' by Juan Pablo Perez Alfonzo, the Co-founder of OPEC. We can see from this definition that we may have plenty but live in abject poverty if the Oil and Gas Industry is mismanaged.

Ghana has a poor record of managing its Century old Mining Sector

The announcement of oil discovery in Ghana brought mixed reactions. For some, the expectations were very high. They believed in part promises by politicians that their poor condition and deprivation were to come to an end. There were however the more cautious Ghanaians who were frightened by the "devils excrement", and in view of the experiences in many other oil-rich countries in Africa where oil wealth did not improve lives and brought instead vested interests, corruption, weak institutions and conflicts. This situation has made many not, to be optimistic because we have poor record of managing our resources.

Ladies and Gentlemen: We want to put it straight on record that if our President and his Cabinet understood the flagrant consequences and ramifications of the Bill as it is in Parliament when passed into Law to regulate our upstream oil industry, he and his cabinet would not approve of it.

We of the Fair Trade Oil Share Ghana PSA Campaign Group are opposed to any other fiscal regime other than the Production Sharing Agreement (PSA).

The Constitution of Ghana Art 257 (6) says: Quote and Unquote: Every mineral in its natural state, under or upon any land in Ghana, rivers, streams, water courses throughout Ghana, the exclusive economic zone and 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.

Ladies and Gentlemen, your Excellencies and invited Dignitaries: Based on the constitutional provision, His Excellency the President and the No.1 Chief Executive Officer of Ghana has the mandate, the capacity, the authority and the obligation to protect, defend and enter into accords or contracts that shall be beneficial to the state Ghana and its citizens.

On this note Ladies and Gentlemen: We the Fair Trade Oil Share Ghana PSA Campaign Group are recommending the following by way of demand.

  1. His Excellency The President to call back the present Bill to cabinet.
  2. Appoint a Think Tank Committee comprising high profile people who have some knowledge of the Oil and Gas Industry.
  3. The Committee to consult, collect data and information, both local and foreign, on the subject matter particularly on contracts with Foreign Oil Companies (FOC).
  4. The Committee to use P.N.D.C. Law 64 and 84 as basis for the research and deliberations.
  5. To ask for some of the P.S.A. Laws that have been signed by the Foreign Oil Companies in countries such as Angola, Sudan, Uganda and others, for study.
  6. The committee to compile its report and put it in the public domain for debate before it's returned to cabinet followed by Parliament. This situation would avoid selling our Oil and Gas Reserves on a silver platter for the Kangaroo to swallow, thus set in what I would call, "THE RESOURCE BREED CALAMITY IN GHANA"

Thank you for listening
God Bless our Mother land Ghana.

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