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Some participants at the NRGI/ ACEP forum in Accra.
Some participants at the NRGI/ ACEP forum in Accra.

‘Build negotiation capacity to maximise E&P fiscal benefits’

The Executive Director of the Africa Centre for Energy Policy (ACEP), Dr Mohammed Amin Adam, has said for Ghana to maximise its benefits from oil revenues, it is necessary to enhance its negotiating capacity to get the best fiscal terms when entering into oil exploration contracts. 

He said the new Petroleum Exploration and Production (E & P) Bill 2016 was a progressive one that “positions the country to take advantage of best emerging practices to maximise its oil find, but the ability to do this will depend on how the state is able to negotiate the fiscal rates very well.” 

“The state must build its negotiations capacity to effectively negotiate better fiscal terms and other conditions that will help benefit maximisation. The state must also build its capacity to efficiently spend the revenue,” he said. 

He was speaking at a forum organised in Accra by the Natural Resource Governance Institute (NRGI) in collaboration with the ACEP on whether Ghana’s E&P Bill secures optimal benefits for its citizens. 

Dr Amin Adam also urged the government, Parliament, the media and civil society to increase their knowledge and capacity and be well motivated to ensure the effective implementation of the new law. 

GNPC has capacity

The Chairman of the Parliamentary Select Committee on Mines and Energy, Alhaji Amadu Sorogho, has defended the decision by Parliament to allocate the 15 per cent carried interest from oil revenues to the Ghana National Petroleum Corporation (GNPC).

The decision, which is part of the provisions under the new Petroleum Exploration and Production (E & P) Bill 2016, he explained, was to help the national oil company grow and subsequently become an international oil company. 

Reacting to concerns about the ability of the GNPC to effectively manage these expected revenues, Alhaji Sorogho said there was no doubt GNPC could do that as the necessary checks and balances had been put in place under the new provisions in the law. 

“There was a serious debate as to where the 15 per cent initial carried interest should go and that took us a long time to settle on whether it should be done on behalf of the government by GNPC or it must be done by GNPC as an entity. The committee was divided but at the end of the day, we all came to a consensus that if we want GNPC to also grow and become an international oil company, then we must start from now,” he said. 

He said there were appropriate checks and balances in place to ensure that “the GNPC doesn’t abuse certain privileges given to it.” 

“The GNPC doesn’t just get up and do what it  likes; the law is very clear on that. The GNPC’s budget is approved by Parliament, its works programme is approved by Parliament, and the Petroleum revenue Management Act (PRMA) is also there to check them,” he said. 

The workshop

The Natural Resource Governance Institute (NRGI), in collaboration with the Africa Centre for Energy Policy (ACEP), initiated discussions to focus on the analysis of the new law as against demands by Civil Society Organisations (CSOs). 

It subsequently held the workshop in Accra to look at how the provisions in the new Petroleum Exploration and Production (E & P) Bill 2016 have addressed earlier concerns raised with the old law, demonstrate the key difference between the old and new law and highlight the key progress made. 

Earlier concerns raised by the CSOs about the old law was that there was no clear roadmap to incorporate the oil and gas sector into long-term socio-economic planning and vision to maximise full employment, industrial and developmental benefits in a transparent manner. 

It also highlighted the weak governance provisions in the old law with respect to awarding contracts, roles of various players along the value chain, as well as provisions on safety, social and environmental impacts. 

 

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