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20.12.2010 General News

Questions on oil

By Ghanaian Chronicle
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On December 15th, Ghana joined the ranks of nations that produce oil in commercial quantities. There has been euphoria– a lot of euphoria.

Therefore, even while we thank a kind and just God for this blessing, we must remind ourselves of some dangers and mis-perceptions that are obvious.

First, the very ceremony to start the production graphically illustrated the ability of this blessing to divide and to curse us. Somehow, the President and his staff found it difficult to assign proper roles to his predecessors in the ceremony.

Indeed, sources close to the former President complained bitterly about the deliberate effort by the Mills government to downplay Mr. Rawlings' role in the oil find in the brochures handed out at the ceremony. This was addressed by some grudging acknowledgement of his role.

To be candid, Mr. Rawlings, for establishing the GNPC and Mr. Kufuor, for refocusing it on its core mission, leading to the oil find, deserve the most credit for the find.

Second, our expectations regarding the oil are way out of proportion to the known value of the reserves. The most optimistic analysts project that we will earn at most 20 billion USD from the oil over the next two decades.

This is far less than Ghanaians in the Diaspora will bring home in the next decade! Also, it will be just as much as we can earn from Aluminum with the right policies. To be fair, we will earn significant revenue from the gas that has not been factored into this.

Third, other countries have been here before. Nigeria and Angola had far bigger reserves, produce more and do not have much to show for it. For example, while we will be producing around 200,000 barrels per day at the peak, Nigeria produces more than a million barrels per day and has done so for years.

Given the examples of these countries, it can be inferred that oil reserves, on their own, do not beget wealth and development.

Fourth, even we have been here before. We have produced significant quantities of gold and have little, very little to show for it, either in the local communities or nationally.

The contrast between South Africa and Ghana in development despite the fact that we have produced gold comparable to them is a sobering reminder of how one can have so much resources, and yet end up with little development.

To compound all these, our leaders, in dealing with the projected revenues, have not started well. In addition to being significantly behind in em-placing the necessary laws and institutions to deal with oil revenue, we are already ignoring the will of the people.

We have been aware of this find for the last three years and yet are struggling to put in place some laws and regulations that are sorely needed.

In flagrant disregard of the 80% of those consulted who opposed the use of revenue for collateralization, the NDC government is going ahead to use significant portions of our oil revenue as collateral for loans. In addition to disregarding their expressed wishes of Ghanaians, our leaders described their disagreement as 'foolish' and 'baloney'.

To help us speedily secure the benefits of oil to our people we must ask some urgent questions.

First, to what extent will our oil find affect petrol prices on the street? Will they be reduced and by how much? Why was this not addressed in the budget? It is important that we determine clearly how the oil will affect petrol prices. As an ancillary and related question, how will this affect the price of electricity?

Second, how are we going to actualize our desire for local content in the oil industry? We all know that despite the oft-expressed wishes to have Ghanaians employed in the industry, they cannot be employed without skills.

It is reported that only 30 of the about 100 people working on the first rig are Ghanaians. What is the target? Which institutions are ready to train them and when is the time-line? Where are the scholarships that will help interested Ghanaians acquire the needed skills?

Third, how are we going to protect our environment in the light of the oil? We are a country that seems helpless in the face of floods caused by rains in Accra and the annual opening of the dam in Burkina Faso.

How are we going to deal with an oil spill? How are we going to deal with increased traffic between Accra and Half-Assini?

Fourth, how are we going to address the legitimate claims of the people of Western region regarding the oil revenue? If Western Region deserves a portion of the revenue, then does Ashanti and Brong Ahafo deserve portions of revenues from Gold being mined in their jurisdictions?

Indeed, how does one have equitable revenue-sharing in a unitary state that is fair to those who live near natural resources and therefore are most likely to be affected by environmental problems?

Fifth, how are we going to ensure accountability in the management of the oil revenue? In a nation with chronic budget deficits and spiraling government expenditures on wages, how does one ensure that we do not short-change posterity by pandering to those alive now to win elections?

I know that some have defended collaterization as a way of ensuring development and building infrastructure etc. How do we maintain this argument when we know that a road built today will need to be rebuilt in 15 to 20 years?

By this logic, can a President mortgage every drop of oil or the very last pesewa of expected revenue in pursuit of development and infrastructure? How much should be reserved for posterity?

These are urgent questions.
It is obvious that we need answers to these questions as soon as possible.

These answers must be devoid of partisanship and politics is already holding us back. Before the NPP left office, it negotiated agreements regarding the gas that will be produced in addition to oil. Motivated by the unsubstantiated believe that these agreements were tainted by corruption, the NDC government has sought to abrogate and/or undermine many of these agreements.

These efforts by the NDC government has delayed the emplacement of systems and institutions that would have safe-guarded the interest of Ghanaians.

Furthermore, the desire by our government to disrespect agreements reached properly by sovereign institutions of Ghana without due process has undermined the credibility of our country amongst investors.

These have been fueled by articles critical of Ghana in the international media.

While we must check corruption, we need parties and actors to believe that others too, are honourable and patriotic. Those in government who assume that all previous governments and Ministers were corrupt are misguided and will harm our national interest.

Specifically, the attitude towards functionaries in the Kufuor administration has not been helpful.

With these in mind, let us move forward to address the questions that have been raised.

Let us open our hearts, learn from others and protect our country's interest. In answering these questions, we must be mindful that the fate of generations yet unborn are at stake too. We must think, not just of the next elections but also, of the next generation.

Let us move forward, together.
May God bless Ghana.

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