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27.06.2019 Article

The Petroleum Exploration And Production Law (2016) Act 919

...‘‘An Exploitative and Economic Slavery Law and Conspiracy against Ghanaians’’
By Mr Solomon Kwawukume
The Petroleum Exploration And Production Law (2016) Act 919
LISTEN JUN 27, 2019

‘’Imagine what Africa will look like when it has fully tapped into its potential‘,’ he said citing opportunities in agriculture, manufacturing and intra-African trade.

‘’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’’, said Mr. Kofi Annan. He was upbeat about prospects for Africa’s resource-rich countries, adding, ‘’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).

Dr. Peter Eigen, the founder of Transparency International observed that the World Bank and Western Governments do not see anything wrong with the multinational companies engaged in extractive industries paying tens of millions of dollars into private accounts overseas to secure bad agreements, contracts and laws in their favor, (DW TV Journal Interview, 31st December, 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 18th July, 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 surprising, painful, sad and shameful the Parliament of Ghana has passed an exploitative, predatory and obnoxious law, Act 919, under Certificate of Urgency almost the mid-night of 4th August, 2016 to legalize corruption and perpetuate the robbery of Ghanaians of their sovereign wealth rights in the name of attracting investment, Mr. Kofi Annan had 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 the Petroleum Exploration and Production Law (ACT 919) to rob Ghanaians of our oil wealth in the name of attracting investment, in favour of Western vested interests and their local patrons.

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

It is a bizarre and abysmal state of affairs we find ourselves in after 60 years of

independence; that our developmental and socio-economic policies have to be

dictated from outside which in the long run do not inure the intended benefits to us

but to the foreigners and their local agents, mostly the political leadership and the elite technocrats.

  1. It is now established and without any contradictions and doubts, that PNDC
    laws 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).

  1. 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 this 21st Century between host government and the foreign
    Oil company (Contractor). All the 34 countries in Africa into Oil & Gas Upstream
    Industry have adopted it.
  2. The Model Production Sharing Agreement of 1995 Between the Ghana
    Government, the GNPC and the Contractor was based on these two PNDC laws 64
    and 84.
  3. Records available at Oxford Institute of Energy Studies and Barrow Company Inc.
    indicated earlier agreements entered into by Ghana in the 1990s based on these
    laws were PSA.
  4. That one of such contracts is "Production Sharing Contract between the
    Government of Ghana, GNPC and Santa FE Energy Resources of Ghana in respect
    of Block Onshore and Offshore KETA Basin" dated 25th June 1997.

  1. In a post on Saturday January 30th 2016 at 1:45am to Ernest Agyepong 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. Ekwow Spio Garbrah

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".

  1. 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 Laws which were not in existence and on our statute books.
  2. That since all the agreements were not in conformity with the tenets of the two laws which supported the PSA, the Senior Officials of the Ministry of Mines and Energy launched campaign to demonize PNDC law 84. At the Think Tanks fronts ACEP spearheaded the campaign, supported by the 135 CSO Platform on Oil and Gas 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. IEA, IMANI Africa, KASA and others opposed the PSA and claimed the Royalty Tax / Hybrid System was a better and superior fiscal regime.
  3. PIAC has proven to be a distractive institution set up through intrigue manipulations behind the smokescreen to have a resemblance of a legal government institution by the vested Western interests. Its leadership from the time of the Rtd. Major to the current leadership have opposed PSA, claiming the Royalty Tax/Hybrid system is a better option than PSA without any empirical and scientific evidence from the African continent.

All the above are resourced by the World Bank, Oxfam America, Star Ghana, DFID, Revenue Watch Institute, GIZ and Oil companies through the so-called CSR.

  1. 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.
  2. That the passage of Act 919, the Hybrid System Law, has given retrospective legal backing to illegal agreements which were void from the beginning.

  1. That the past Governments and Parliament erred in law. The practice of jurisprudence frowns upon this practice.
  2. In a mail sent to Dr. Anthony Dotse, a supporter of PSA who resides in the
    USA, by Mr. Kwame Pianim, a member of the Petroleum Commission, on
    September 3rd 2016 at 7.22pm he wrote: "It took a major review tweaking of the
    Oil & Gas regime as structured by Tsatsu Tsikata by President Kufuor with
    support from Commonwealth Secretariat". The beginning of the conspiracy against Ghanaians.
  3. That the implication of this action was the reversal of the PSA Oil & Gas regime
    structure put in place by Tsatsu Tsikata that would have inured an equitable and Fair Share of 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 losses of almost U$ 10 billion at the end of 2018.

  1. That in the estimation of the PSA Campaign Team, Ghana is on the way of losing over US $50 billion at the end of production life of the Jubilee Fields alone, which holds close to 3 billion barrels of oil.

  1. That in another mail sent by Mr. Kwame Pianim to Dr. Anthony Dotse on October
    17th, 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".

a. Our first question is, if Mr. Kwame Pianim knew that the PSA is a superior fiscal regime,

why should Petroleum Commission, joined by the Ministry of Mines and Energy, GNPC, ACEP, CSO Platform on Oil & Gas and other Think Tanks, opposed the introduction of PSA Fiscal Regime into the new Petroleum Exploration and Production Law, Act 919?

  1. Our next question is, what is peculiar with Ghana's Upstream Oil industry that Ghana cannot adopt PSA, while countries with lesser stature and status than Ghana 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?

  1. Are their political leaders and technocrats in charge of their Oil & 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 Ghana. WHY?

  1. 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 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 PSA's mostly vest ownership on the State and could give the country over 50% of the accrued money," said by Mr. Ben Dagadu, Deputy Minister of Petroleum, Graphic Business of Tuesday March 8th to March 14 2016

These are questions Ghanaians need answers to.
On 12th January 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, South African Judge, Professor and Social and Economic Rights Experts and Professor Raymond Atubuga of Ghana and others from Tanzania. Mr. Tsatsu Tsikata came around briefly and criticized some aspects of Act 919 which limits our 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 against the masses of Ghanaians from the corridors of Western powers in collaboration with few Ghanaian elite technocrats and politicians. It is a 419 Royalty scheme to rob Ghanaians of their sovereign oil and gas wealth in the name of investment for development; that, 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 Oil revenue. The regime can also achieve greater take by increasing the state’s share in production sharing agreements’’ (Sara Zedingle Ghebremusse, Faculty of Law Thesis, University of Toronto Canada, 2014).

Ladies and Gentlemen thank you for your time.
Solomon Kwawukume
Executive Director - CNREM
Former Senior Research Officer - GIGS

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