An energy expert, Dr. Mohammed Amin Adam over the weekend expressed worry over the processes employed by Ghana before oil blocks were awarded to companies to operate.
He said here during a training programme for members of Journalists Against Corruption Coalition organized by the Africa Centre for Energy Policy (ACEP) with support from the Open Society Initiative for West Africa (OSIWA).
Speaking on the topic, ?Local Content Regulation in Ghana,? Dr. Amin, Executive Director for energy policy think tank, ACEP said the current contracting process in the West African country made it extremely difficult to attain good governance, transparency and accountability in the sector.
In spite of the Provisional National Defense Council (PNDC) Law 84 being explicit on a company?s technical competence and financial capability, he observed most oil companies contracted do not have the technical competence and financial capability to have been awarded oil blocks.
Dr. Amin said, ?Without technical competence and financial capability, some companies will make money illegally, delays the exploitation and production process as well as become a conduit for public officers to abuse their office.?
The ACEP Executive Director emphasized Ghana had failed to learn from its past mistakes hence its inability to come out with strong laws to promote the interest of its citizens.
He urged Ghana to adopt best practices in petroleum exploration and production. ?Ghana must look and adopt the best practices regarding the exploration and production of oil for the benefit of the people.?
South American country, Brazil since 1970 allows its citizens to make public comments on contracts as part of the evaluation process before oil contracts are awarded to companies.
South Sudan and Kenya, Dr. Amin observed have come out with strong laws on the petroleum sector to protect the national interest of their countries.
Ghana?s petroleum licensing process is based on the first-come-first-served principle, also known as open-door policy.
Section 2(2) of the PNDC Law 84, states, ?Without prejudice to section 1 of this Law, any person who intends to negotiate for a petroleum agreement for the exploration, development or production of petroleum shall submit an application to the Secretary in accordance with such Regulations and such competitive bidding procedure as may be prescribed?.
The Ghanaian law mandates the Minister for Petroleum to represent the Republic of Ghana in negotiations for and entry into petroleum agreement (PA).
The law also directs any person who intends to enter into negotiation for a PA for the purpose of exploration, development or production of petroleum to submit an application to the Minister responsible for Petroleum.
Evaluation is then done by a Block Evaluation Committee, comprising the Ministry of Petroleum, the Petroleum Commission and the Ghana National Petroleum Corporation (GNPC). The evaluation of applications focuses on technical competence and financial capacity.
An Evaluation Report on the application, which also makes recommendations, is submitted to the Minister for Petroleum for approval; and consideration for negotiating an agreement.
The Minister sets up a negotiation team to negotiate a PA with representatives from the Ministry of Petroleum, Ministry of Justice and Attorney General?s Department, Ministry of Finance through the Ghana Revenue Authority and GNPC).
The negotiated PA is submitted back to the Minister who presents it to Cabinet for approval and later to the country?s parliament for ratification.
PNDC Law 84 requires an applicant to demonstrate clearly its technical competence and financial capability.
Applicants must also information on past oil industry experience, description of proposed work program and accompanying budget for the proposed area of interest with detailed minimum exploration program and budget for each phase of the exploration period.
It also includes proposed sources of funds for the petroleum operations, organizational chart showing departments and appointments proposed for its activities and the type of expertise and how they are to be obtained.
The rest are sources from where applicant expects to obtain geophysical equipment, processing equipment and interpretation services and details of applicants? financial status (audited financial statements of the applicant and /or its parent company) for the last three (3) years.
Ghana has begun the process to amending PNDC Law 84 and currently has an Exploration and Production (E&P) Bill before the country?s legislature. Enditem.
Source: Xinhua
