Open Letter to President Mahama: Hybrid System is Anti-Growth, Trade, and Fair Oil Share vs. PSA
30th November, 2015
Hon. John D. Mahama
C/o The Office of the President
Flag staff House, Accra, Ghana
Subj: So-Called "Ghana Hybrid System" Contracts for Sovereign Ghana Oil is Anti-Growth, Anti-Fair-Trade, and Anti-Fair Share for the People of Ghana
I am a Ghanaian national whose parents, grand-parents, and great-great grand-parents were Ghanaians, going back to the Gold Coast, and as history teaches about Ghana and Africa.
I fully support the DFID-funded GOGIG program to build up oil management, transparency, and accountability protocols to promote better stewardship and investment of income Ghana derives from Ghana's non-renewable oil and gas resources at the Jubilee Oil Fields, and at other locations in Ghana.
However, I believe that unless a superior contract is at the foundation of agreements between Ghana and the Foreign Oil Companies in the first place, Ghanaians will be the net losers in what are essentially Non-Growth, Non-Fair Trade, and exploitative processes. Such is what the so-called Ghana Hybrid System contracts have delivered to Ghana thus far, resulting in a net loss to Ghana of over $6 billion since 2011.
I understand that the Ghana Institute of Governance and Security (GIG), on many occasions during the last 2 years-plus, made several presentations to you, to the press, to your office, and to members of the responsible professional bureaus advocating consideration and adoption by Ghana of the Gold Standard for sovereign oil contract, the Production Sharing Agreement (PSA), for Ghana's oil, all to no effect.
In short, GIGS, as another concerned Ghanaian interest, but one with uncommon expertise in Oil and Gas production, among other strengths, has been tagged and banished as anti-development. Rather, it is organizations such as OXFAM and the Africa Center for Energy Policy (ACEP), both funded in part by DFID, both incapable or unwilling to review independently and objectively the data GIGS has presented over the last 3 years-plus, it is those organizations the Parliament of Ghana and the Government of Ghana as a whole is relying on to push through the unaccredited "Ghana Hybrid System" concession agreements, in haste.
This is bewildering and disturbing!
Ghana will lose a lot more, if the trajectory of Ghana-Hybrid System does not change to directly benefit the People of Ghana.
Fact is, if in nearly 5 years of oil production Ghana received 27,169,710 barrels of oil when Ghana, as owner of the resource, would have been entitled to nearly 100,000,000 barrels of oil under the PSA, still with fair compensation and profit for the Oil Companies that have the technology to lift the Ghana Oil, why wouldn't Ghana's leaders listen to GIGS, and allow those in the opposing camp to prove that their Ghana-invented "hybrid" is a "better mouse trap"?
After all, Ghana's peers, from Angola, to Niger, to Chad, to Brazil, to Sudan, to Tanzania, to Kenya, to Egypt, to Belize, to Nigeria, all of them, have all adopted the Gold Standard Oil Contract, the PSA/Production Sharing Contract agreements for their sovereign Peoples.
Specifically, under the world-standard Production Sharing Agreement (Tanzania, Senegal, Indonesia, Tajikistan, Chad, Mauritania, etc.), Ghana would be on track to lift 49.70% of Total Revenue at 5% royalty, excluding Profit Taxes and Participating Interest. In fact, Ghana could, under Fair-Trade and Growth Policies, lift as much as 61% of Total Production without Participating Interest, like Tanzania. (I will add that the PSA is strongly recommended by the US GAO).
I ask, humbly, that the Ghana Parliament and the Government of Ghana, in the interest of "Fair-Trade Oil Share-Ghana", true Growth-and-Development, and accountability, suspend all efforts to force through Parliament the so-called Ghana Hybrid System for Ghana's oil contracts. I ask, humbly, that Ghana adopt the PSA/PSC as the foundation contract for Ghana's oil as is now customary in most countries. (At the minimum, allow Ghanaians to see the numbers from the opposing camp, including the DFID-funded entities).
In support of my letter, I have attached a copy of a Briefing Paper from GIGS and others detailing the argument strongly in favor of the Production Sharing Agreement contracts for Ghana. In the main, if the bill currently in Parliament is approved by Parliament, you would be denying Ghanaians a fair share of their own oil and gas resources in the investment, now, and in the future.
REQUEST: Sir/Ma'am, in view of the urgency of the matter, that time is truly of the essence, we GIGS, other PSA Supporters, and I) humbly request a public statement by your high office(s) on this important matter no later than 7th December, 2015, seven (7) days from publication and receipt of this letter. (That action on your part will allow us to put much of our time and other resources to other productive uses as we all continue to assist in the development of Ghana by our various efforts, together and independently, but Ghana-Centered/Ghana-Proud and non-partisan, always).
Prof Lungu (Concerned Ghana National)
Attachment - PowerPoint Presentation:
1. Briefing Paper: Fair-Trade Oil Share - Ghana (30th November, 2015).
(Also available at http://ghanahero.com/Productions.html . See under "Missives, Notes, and Legends).
Speaker of Parliament
C/o Public Affairs Department
Office of Parliament, Parliament, Accra, Ghana.
Disclaimer: "The views/contents expressed in this article are the sole responsibility of Professor N. Lungu and do not neccessarily reflect those of Modern Ghana.