Why We Support Production Sharing Agreement System

GHANA INSTITUTE OF GOVERNANCE AND SECURITY/FAIR – TRADE OIL SHARE GHANA-PSA CAMPAIGN MAKES MATTERS CLEARER ON THE OIL AND GAS LAW – ACT 919 (2016) FOR REGULATING GHANA’S UPSTREAM OIL AND GAS INDUSTRY

PRODUCTION SHARING AGREEMENT VRS GHANA HYBRID SYSTEM

It is a bizarre and abysmal state of affairs Ghana finds herself in after 60 years of independence, that our developmental and socioeconomic policies have to be dictated from outside, which in the long run do not inure the intended benefits to us but to the foreigners.

Our petition to the President of the Republic of Ghana, with copies to the Vice President, the Sector Minister (Oil and Gas), to Parliament (the Speaker and all Parliamentarians), the National House of Chiefs and the Council of State, who are currently working on the Petition at stake, we at GIGS/FTOS-GH PSA Campaign Team in Ghana wish to share with the general public the facts on which we are petitioning the current government, as we have done to the previous government of Ex-President John Mahama.

1. We submit to the general public that it is now established and without any contradictions and doubts, that PNDC Laws 64 and 84 (1984) which form the legal framework for managing the Upstream Oil and Gas Industry before the discovery of oil in commercial quantities in 2007 supported PSA (Production Sharing Agreements).
2. That, the basis of these two laws being PSA, the laws were crafted and modeled to represent the most progressive, equitable and fair fiscal regime for sharing petroleum revenue in the 21^st century between the host government and the foreign company (contractors). All the 34 countries in Africa into Oil and Gas Upstream Industry have adopted PSA.
3. That, the Model Production Sharing Agreement of 1995 between Ghana government, the GNPC and the Contractor was based on these PNDC Laws 64 and 84.
4. Records available at Oxford Institute of Energy Studies and Barrow Company Inc. indicated earlier agreement entered into by Ghana in the 1990s based on these laws were PSA.
5. That, one of such contracts is “Production Sharing Contract between the Government of Ghana, GNPC and Santa-FE Energy Resource of Ghana in respect of Block Onshore and Offshore KETA Basin” dated 25^th June, 1997.
6. That, in a post on Saturday January 30^th 2016 at 1:45am to a supporter of the Hybrid System by Mr Kwame Mfodwo, copied to the following, Glu-Ghana-leadership forum, Okyeame forum, The Statesman, The Daily Guide Newspaper, The Insight Newspaper, Mr Seth Terkper, Mr Ekow Spio-Gabrah, etc., 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 Tsatsu in the 1980s”.
7. That, contrary to the existing PNDC Laws 64 and 84 all agreements and contracts entered into by the previous NPP and NDC governments and approved by Parliament from the year 2000, have been modeled after the Royalty Tax/Hybrid System which was not in existence and on our statute books as laws.
8. That, therefore, all the agreements were not in conformity with the tenets of the two PNDC Laws which supported the PSA.
9. 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.
10. That, the passage of Act 919, the Hybrid System Law, was giving retrospective legal backing to illegal agreements which were void from the beginning.
11. That, the past Governments and Parliament erred in law.
12. That, in a mail sent to Dr Anthony Dotse, a supporter of the PSA who resides in the U.S.A., by Mr Kwame Pianim a member of the Petroleum Commission on September 3^rd 2016 at 7:22pm he wrote: “It took a major review tweaking of the oil and gas regime as structured by Tsatsu Tsikata by President Kuffour with support from the Commonwealth Secretariat”.
13. That, the implication of this action was the reversal of PSA Oil and Gas Regime structure put in place by Tsikata that would inure 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 has brought about the colossal loses of over US$ 6 billion in five years.
14. That, in the estimation of the Campaign Team, Ghana is on the way of losing almost US$ 7 billion plus in another five years ending 2020.
15. That, in another mail sent by Kwame Pianim to Dr Anthony Dotse on 17^th October, 2016 at 3:50pm he wrote: “Let us be clear what my position is: I am for the introduction of the 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”.

A) Our question is, if Mr. Kwame Pianim knew about this (TRUTH) that, the PSA is a superior fiscal regime, why should the Petroleum Commission, joined by the Ministry of Mines and Energy, GNPC, ACEP, CSO Platform on Oil and Gas and other Think Tanks, keep on opposing the introduction of PSA Fiscal regime into Our Petroleum Exploration and Production Laws?

B) Our next question is, what is peculiar with Ghana’s Upstream Oil Industry that we cannot adopt PSA whiles countries with lesser stature and status than Ghana on the African continent are adopting it? For example, Togo, Chad, Mali, Niger, Republic of Benin, Sierra Leone, Liberia and South Sudan. Are their political leaders and technocrat in charge of their oil and gas sectors better educated, learned and well informed than their counterparts in Ghana?

NOTE: Tullow and Kosmos have signed PSA with almost all the newly emerging countries into the Upstream Oil Industry in Africa except GHANA. WHY? Examples are Uganda, Kenya, Tanzania, Mauritania, Senegal, Cote D’Ivoire, etc.

C) What is the motivating factor influencing our POLITICAL LEADERS and the TECHNOCRATS in resisting and opposing the adoption of PSA in Ghana when they are aware 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?

These are questions TRUE GHANAIANS must ask and find answers to.

NOTE: The situation, in our humble opinion, is more of LEGAL issues than ECONOMIC because it is the LEGAL that has bearing on the economics of our nation. It is also our humble opinion that, for this National issue to be properly addressed and settled, the Council Of State should initiate a National Workshop bringing all the stakeholders for and against the Ghana Hybrid system to state their case for a National consensus to be reached as to which Fiscal regime Ghana should adopt to maximize her economic benefits from her sovereign property or resource.

NOTE: In conclusion, Dr Raymond Atuguba the past Executive Secretary to Ex-President Mahama and supporter of the PSA has declared Act 919 as GARBAGE at the Ghana Oil Conference held at Labadi Beach Hotel from 11^th – 13^th January 2017.

What do you say about this National issue? Act 919 supports contracts that have no legal backing from the start of Ghana’s Upstream Oil and Gas Industry. Besides, it does not give Ghana a fair produce share of our sovereign oil and gas resources. Ghanaians deserve better as the sovereign owners of the oil and gas resources as well as other natural resources. Go for PSA - Production Sharing Agreements, which is provided for by PNDC LAWS 64 and 84 contained in Ghana’s statutory books since 1984. It will give us more than 60 % of total production revenue accruing from the Upstream Oil and Gas Industry if Ghana participates.

Please sign up in support of GIGS/Fair-Trade Oil Share-Ghana PSA Campaign. We speak for posterity and we demand justice and fairness in governance.

Join the Fight NOW or NEVER.
Imam Adam Abubakar Rev. C.E Gyaban-Mensah (Advocate)

Tema Metropolitan Chief Imam Tema Metropolitan Industrial Chaplain

National Leader, FTOS-Ghana PSA Campaign Advocate of FTOS-Ghana PSA Campaign

Tel: 0200041249/0246195370 Tel: 0279565574
Solomon Kwawukume
Senior Research Officer, GIGS
National Co-ordinator FTOS-Ghana PSA Campaign

Tel: 0246449104