By Dr. Kofi Newman, Andy Kwawukume, J. Y. Fiebor (MBA)
(FTOS-Gh PSA Campaign)
Without doubt, since the “discovery” of oil in Ghana over the last 15 years, the FTOS-GH PSA Campaign has been the key, most prominent, and persistent voice that has continued to question whether Ghana is receiving a fair share of its own oil revenues. We have said that the “garbage oil law” absolutely does not fit the purpose of national interest and revenue collection for sovereign natural resources. At great cost to members, the Campaign has continued to advocate for a robust PSA regime for Ghana’s oil and gas commensurate with sovereign interests and continuing financial, commercial, and regulatory investments in the sector made through the GNPC, the Petroleum Commission, PAIC, General Revenue Authority, etc. As the days, months, and years come and go, you can expect that this important work will continue to be cited in trade, academic, and professional journals in fulfilment of an important void in advocacy and the national agenda, with serious implications for international trade and commerce. Writing for the Pan Africa Digest with respect to challenges facing the in-coming John Mahama administration, Femi Akomolafe cites the work of this campaign, observing that “Ghana’s extractive industry has been bastardized beyond description”, but Mr. John Mahama “can count on people like…Andy Kwawukume, and his patriotic comrades, who have produced enough policy papers to help any president who is serious about helping Ghana earn the maximum profit from its natural resources”. Mr. George Ndi (2017) writes about the foundation of the problem in the Journal of Energy & Natural Resources Law:
“The opposition to the new law, spearheaded by the Fair-Trade Oil Share-Ghana campaign, has continued even after the passage of the new law, whose enactment the group perceives to have proceeded with precipitate haste…(and)…the many amendments at the bill stage (with more than 145 proposed amendments up to the first reading of the bill) constitutes evidence of a tacit rejection of the new law by Ghanaian legislators” (University of Huddersfield Repository, 2017).
The Fair-Trade Oil Share Ghana (FTOS-Gh) PSA Campaign needs all Ghanaians to know that the multi-million dollar cases currently before the International Chamber of Commerce (ICC) for arbitration in London, a foreign capital, a case that arose from the failure of the government of Ghana to timely, faithfully, and “efficiently” collect corporate income taxes and royalties from the foreign oil companies (e.g. Tullow Oil), originated from the Whistleblower case the FTOS-Gh PSA Campaign, at great cost to members, filed against the Government of Ghana back in 2018. (We provide a status update at the end of the paper).
Additionally, in addressing the matter of individuals more directly responsible for passage of the “Garbage Oil Law”, recognizing that there was quite a bit of revolving chairs among personalities leading up to the approval of the bill by the former Mahama administration, the following 7 individuals (all men) had key positions in the NDC government without whom the law would never have been enacted in its anti-Ghana, pro-FOC state:
1. Mr Armah Kofi Buah, Minister, Energy and Petroleum
2. Mr. Benjamin Dagadu, Deputy Minister, Energy and Petroleum
3. Dr. Kwabena Donkor, Minister for Power.
4. Alexander Kofi-Mensah Mould, CEO, GNPC.
5. Mr. Amadu Bukari Sorogho, Chairman, Mines & Energy Committee, Parliament
6. Mr. Mahama Ayariga, Minister, Information and Media Relations/Communications
7. Mr. John Mahama, President. Our records and other information indicate Mr. Mahama may have been given bad advice by gatekeepers around him, that he himself may not have exercised due diligence, that he failed to seek out other objective and competent counsel, and/or did not avail himself of policy and other documents freely available online, before he signed the Garbage Oil bill in 2016. Others have speculated that perhaps John Mahama also profited from foreign oil company “Big Men” confetti cash in more ways than one.
To recap, in Part 1 and 2, we informed Ghanaians and supporters we are not against foreign investments, except that we are opposed to predatory foreign investments that do not facilitate fair trade and equal share. By the same token, our advocacy and other efforts are not funded by any foreign interests or oil company. We’ve asked Ghanaians to demand an answer to the central question why Ghana has not received a single pesewa or dollar in oil signing bonus after more than 15 years of selling oil in commercial quantities. The people must ask into whose pockets payments like those made to Guyana before a single barrel of oil was extracted, have gone. We have said that it is unwise for Ghana to reduce the statutory 15% participatory interest as suggested by Mr. Egbert Faibile. When Mr. Atta Akyea blames and chastises the GRA for doing their job, for demanding from Tullow Oil refunds and payments for unearned “…capital allowances, expenses, and tax exemptions”, we tell Mr. Akyea he is wrong for attempting to credit the “decline in petroleum production” to the FOC talking points, including “unpredictability of Ghana’s regulatory environment”.
Ghanaians must frown upon and condemn the lies and distortions propagated by certain government official (e.g., Mr. Osei Afriyie, GNPC – Keta, IFEJ Event, 2017), that Ghana does not spend a pesewa exploring and developing petroleum and gas, that Ghana does not invest in the sector. During 2015-2020 alone, GNPC spent nearly $1.3 billion on development and production activities associated with Jubilee, Sankofa and TEN Oil fields. Royalty is taken at the top. We pointed out that in 2016, the Petroleum Commission made wrong and misleading statements regarding oil royalties paid by Tullow Oil and Kosmos Energy with regards to the Deepwater Tano (DWT) & West Cape Three Point (WCTP). At a minimum 5% royalty, Ghana ought to have received $300,000.00 more than was reported for the period 2010-2014, and the PC owes Ghana’s Parliament an explanation. Next, the new Tullow Oil practice of approving multi-year sweet deal sole-source contracts such as the Bumpty-engineered/backed $150m routine oil facilities inspection, maintenance and repair contract that ballooned into a $450 million gravy for a couple of well-connected, novice, companies with little track record in the industry except kinship to Mr. Nana Akufo-Addo that was exposed by Mr. Kevin Taylor smells of corruption and unnecessary cost that ultimately are charged to Ghana as “expenditures” by Tullow Oil. Finally, it was at the 2017 International Ghana Oil Conference in Accra featuring several eminent energy law professors and other experts, including Mr. Tsikata, that Act 919 was declared “garbage” oil law, not fit for purpose in Kwame Nkrumah’s Ghana.
FOUR YEARS TO 2028 IS A MIGHTY SHORT TIME TO COUNT:
And so, as the 2024 electoral votes are still being collated and the ruling New Patriotic Party (NPP) continues its parliamentary seat losing-streak, NPP having already lost the Presidency in a blowout to the NDC party, we the members of the FTOS-Gh PSA Campaign are calling on all Ghanaians not to rest on their oars. We are calling on you to continue lending your voices and your efforts towards remedying the wrongs now. Mr. Mahama’s NDC must now annul the garbage oil law the NDC enacted in the dead of the night in 2016. Ghanaians must now demand the cancellation of all oil contracts signed within the last 4 years for administrative and legal review by the in-coming Mahama NDC party. The proposed merger between Kosmos Energy and Tullow Oil, suspended by Kosmos Energy as of this writing, must be reviewed by the new government. At the minimum, the NDC, the party directly responsible for the garbage oil law, must immediately suspend preparation and bidding on new oil and gas blocks until the Petroleum Commission and the GNPC re-publish the Model PSA Agreement with increased share for Ghana, as sovereign owner. The revised model PSA must be mandatory, government-approved standard below which any Ghanaian official negotiating on behalf of Ghana may not bargain with any foreign oil company. (We provide 16 recommendations at the end of the paper).
While the current Model PSA Agreement is a technical document, the key essential elements are not beyond the comprehension of the average reader, if they devote a little time and effort, if they graduated secondary school or high school and paid a little attention to civics, history, and elementary arithmetic. The hope is that most Ghanaians will recognize that the provisions of a mandatory PSA schedule is directly associated with the total development of Ghana with respect to revenues generated from Ghana’s depletable oil and gas wells, as well as the other minerals, including gold. Continued plunder may echo to the lives and negatively affect the well-being of their sons, daughters, and great-grand-children when the new generations discover to their utter disgust that certain Ghanaian officials gave away Ghana’s oil and gas resources for pittance. They would find to their disappointment that all of the resources were extracted and depleted before they were even born, with nothing to show their own children; that their farms, gardens, forests, backyards, and rivers have been plundered and defaced directly by the hands of their elders and ancestors who allowed foreign interests to plunder and take the lions share.
(NOTE 1: There is a cost for “depletion” of sovereign oil and gas. That is one reason why we choose to use the label “EXTRACT”, instead of “LIFT” in the Campaign’s papers. We employ “EXTRACT” to characterize the drawing of depletable oil from the ground, “lift” being a fancy trade label to fool and de-sensitize owners of oil wells about loss to their wells, as operators reel in most of the income generated from production, and quantity of resource is reduced to nothing, oftentimes with significant environmental and social maladies and disbenefits long after).
Sadly, the other big obstacle we have faced in our advocacy is convincing even our highly educated elite that Ghana could have received closer to 60% or more shares of the oil extracted without further contributing to exploration and development of the oil extracted under a more robust PSA. Unfortunately, many refused to read on the subject and instead chose to be ignorant, some willfully or selectively, as they received extra benefits for the crooked non-standard oil contracts. Papers, documents, and other materials provided by us to many government officials, media, and opinion leaders, at significant cost in time, money, and other resources to this campaign, have largely been ignored. Even most of the copies of Ghana’s Oil and Gas Discoveries: Towards Full Maximum Benefits, a book published by our National Coordinator, a book curated by many major Western libraries, copies of which were donated to Ghana’s MPs on 10 July 2013 at no cost to Ghana, were collected back from the offices of the Clerk of Parliament. We heard that the then Head of the Select Committee on Mines and Energy, Dr. Kwabena Donkor, ordered that the books should not be distributed to the MPs. A few notable Ghanaians, some with Ph.Ds., claimed they read the books and articles but said the subject was not their field of specialisation and so could not form an opinion. (Some confessed later that they did not read the materials at all).
Then, there has been the political and media silence imposed on us, thanks to the powers-that-be and incentives given to some media houses, as we’ve noted in passing. Our National Coordinator reported being told to his face, “We also want to educate our children abroad.” This, from a journalist who soon rose to a prominent NPP government-appointed position. Although we received some attention through MyJoy Media, it turned out the time slot for one particular TV appearance on 19 August, 2016, was actually paid for by ACEP, quite possibly using money from the DFID and other foreign oil companies, without prior disclosure to our representative and the audience. The discourse time was naturally grossly skewed against FTOS-Gh PSA Campaign, 4-to-1, by our estimate. For the record, at that 2016 MyJoy TV session were:
- Dr. Mohammed Amin Adam, leader of ACEP, now the out-going NPP Finance Minister, previously Ghana’s Deputy Minister of Energy, “with responsibility for the petroleum sector”. Apparently, fixing the garbage oil law was never part of that “responsibility”
- Mr. Samuel Bekoe, representing the Natural Resource Governance Institute (NRGI)
- Mr. Mutawakilu, then Deputy Chairman of the Select Committee of Mines and Energy
- Mr. Evans Mensah of MyJoy TV. Turned out there was even worse news for Ghana with respect to Mr, Mensah. It was later revealed in the media that Mr. Mensah received $125,000 from foreign oil interests (Aker of Norway), money paid “annually” to his Excomsult Media company for “Media Consultancy and Communication Service.” No wonder, Mr. Evans Mensah found it convenient to stay away from questioning the “attempts by Aker Energy and Ghana National Petroleum Corporation (GNPC) to go into a US$1.6 billion transaction,” considering his agenda included promoting the foreign interests, according to a Ghana-interest scoop by The Herald. According to their report:
“…Aker Energy, had engaged Evans Mensah from 1st January 2022 to December 2022, but The Herald’s information is that, the engagement dates way back (far back to 2019), … when Aker Energy decided to pursue a revision of the terms of their contract to make it more generous after the Ministry of Energy rejected the PoD for the strategy proposed for developing the Pecan field… implying that he has received more than the US$125, 281. 21…(as) Rented Joy FM Journalist bags US$500,000 from Aker Energy so far…” (The Herald, Various Reports, 2023).
In email exchanges with Dr. Anthony Kobla Dotse, another important supporter of our campaign, on September 3rd 2016, Mr. Kwame Pianim, a member of the Petroleum Commission (sorry, Sir, we have to use this information), wrote: “It took a major review tweaking of the oil and gas regime as structured by Tsatsu Tsikata by President Kufuor with support from Commonwealth Secretariat.” A new model petroleum agreement was then prepared to fall in line, and retroactively backdated to 17 August 2000, when President Kufuor was not in power, to replace what Mr. Tsikata had put together, PNDCL 84 was more consistent with the PSA fiscal system. This was substantiated in a post to the Okyeame Forum by another lawyer who worked with Mr. Tsikata, Mr. Kwame Mfodwo, who reiterated how they collected the information worldwide to frame the law. In another mail sent to Dr. Dotse by Mr. Pianim, a founding member of the NPP, on 16th October, 2016, Mr. Pianim buttressed this point:
“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 to some Hybrid System should be enough evidence that it is inferior to a properly structured, implemented PSA”.
With respect to Mr. Tsikata and his massive umbrage about the characterization of Act 919 as garbage by “Harvard professors”, we can in theory conclude that the multi-million-dollar sweet deal contract he received for Strategic Oil from foreign oil interests could have heavily compromised him and influenced his view on the Ghana Hybrid System that, as we’ve shown, most favors foreign oil interests. In addition, we will note that the International Financial Corporation (IFC), even the United States SEC or other law enforcement agency, declining to further investigate reports of bribery or other malfeasance, is neither evidence of innocence, nor is it compliance with ethical norms and standards of their own countries that the IFC, U.S., or other party has no interest or equity.
FIVE (5) QUESTIONS FOR GHANAIANS & OBJECTIVE READERS:
1. If Kwame Pianim recognized that the Ghana Hybrid System was inferior for oil revenues, the question becomes what Ghana-centered steps did Pianim take at that time to advise Presidents Mills and Mahama, the MPs, and Ghanaians that could have prevented the 2016 law, soon to be described and labelled as “garbage” by eminent professors of law, from being passed?
2. If Mr. Kwame Pianim and others thought that the PSA was a superior fiscal regime for sovereign oil revenues, why did the Petroleum Commission join the Ministry of Mines and Energy, GNPC, ACEP, CSOs on Oil and Gas and other Think Tanks, to oppose our campaign for the consolidation of the existing PSA fiscal regime into a properly constituted, more robust PSA law, after many of them and the oil companies themselves had declared Ghana to be sufficiently “de-risked”, and oil companies were rushing into Ghana at the time?
3. If fellow African countries including Ethiopia, Togo, Chad, Mali, Niger, Eritrea, Benin, Sierra Leone, Liberia, Senegal, Kenya, Uganda, Tanzania, and South Sudan, have all signed PSA agreements without any fundamental questions about de-risking (remember that (a) South Sudan is still at war with itself, (2) hardly any of these countries have even 25% of the knowledge, skills, aptitude, and capacity (K-SAC) of GNPC)), are Ghanaians supposed to understand that the political leaders and technocrats in charge of the oil and gas sectors of those fellow African states are better educated, more learned, better informed, more intensely nationalistic, than their counterparts in Ghana?
4. As Kosmos Energy is now considering buying up Tullow Oil’s interests (as of this writing we understand the offer is off the table, subject to recall by Kosmos Energy) including those in Ghana and possibly the PSA contracts in the other African countries, should not these Ghanaian officials and politicians explain to us the superior Ghana-Hyrid-Benefits connected to Tullow Oil and Kosmos Energy not signing PSAs with Ghana; while all the newly emerging oil producing countries in Africa have PSAs to show their fellow citizens and supporters?
5. What are the motivating factors that influenced our political leaders and the technocrats in resisting and opposing the adoption and implementation of a robust PSA in Ghana when they are aware PSA would accrue more than 50% of total production revenue to Ghanaians, as owners of the resource as well as investors and risk-takers, as against the Royalty Tax/Hybrid System certain political leaders and the technocrats invented which now accrue a lot less than 25% of total oil production revenue?
Let us now listen to one such person, Mr. Benjamin S. K. Dagadu, former Deputy Minister of Petroleum, who, over the years, had been accused of conflict of interest and other malfeasance in the award of Ghana oil blocks, including one “won” by a company called A to Z Petroleum for which he, Mr. Dagadu, was “the General Manager”. Mr. Dagadu said this, himself:
“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 PSAs mostly vest ownership in the State and could give the country over 50% of the accrued money,” (Graphic Business, 8 March to 14 March, 2016).
Speaking to Joy Business at the recent book launch of his My Footprint in Ghana’s Black Gold, Dr. Amos Ofori Quaah, former Chief Executive of GNPC, urged Ghana to return to the oil Production Sharing Agreement to accrue more revenue from hydrocarbon resources. According to him, the country’s current contractual agreement for petroleum exploration is a bane to the development of the sector and the economy at large:
“Personally, I think we should review the agreement and go back to the production [sharing] agreement because what we are getting is simply not fair for the efforts we put in. Is not fair, we could do better…We went into this hybrid thing which has not helped Ghana because technically the Production Sharing Agreement stood to give Ghana more of the resources than we have at the moment. It’s a very sad reflection of the industry. I think we should go back to the production sharing agreement.”
Reportedly, Dr. Ofori Quaah resigned from his post because he was not happy about Kufuor’s handling of the upstream oil sector. During his book launch event he said that some of his colleagues even “met their untimely death in the quest to search for offshore oil,” and wanted a review of the garbage oil law partly in recognition of the suffering of departed colleagues, and to honour their contributions.
OUR RESPONSE TO THE “HYBRID SYSTEM” TECHNOCRATS:
We, in the FTOS-Gh PSA Campaign, will continue to use every avenue, tactic, and resource available to us to press on. We will press on until the garbage oil law is annulled or significantly amended to cure the corruption infestation therein that gives a solitary Minister sole power to bypass open, competitive bidding, and a standard minimum model PSA made mandatory for all new oil contracts and oil blocks regardless of who is “the minister”, or government in power.
To us, the reasons Ghana is losing oil revenues massively to the FOCs and the PIAC and Ghana Petroleum Commission can at the same time loudly trumpet “Ghana has made over $10bn from 633,300 barrels of crude oil since 2010”, without also reporting to Ghanaians exactly how many barrels and how much the FOCs took out of Ghana after allowance for their cost of production during the same time is another significant, perplexing, and confusing problem.
Underneath all of that are multiple levels of conflicts of interests, abrogation of Parliament’s power to solitary “Minister of Energy”, propaganda and deceit by many in the Ghana media and TV, NGOs, and above all, the betrayal of trust reposed in our politicians and technocrats. As we’ve shown in the series and other notices, the betrayal is associated with the “Big Men confetti,” free shares for some and lucrative sole-source contracts and payments under tables to some other officials and their spouses, falling into their pockets like sweet honey, as they continue to be unable to show a single oil and gas signing bonus for Ghana over the last 15 years, ever.
Shamefully, many political leaders, even if patriotic and not selfish or greedy, cannot make the right decisions in these matters because they are ignorant about the PSA, and will not ask for help from competent and objective experts. And so, they became prey for heavily compromised NGOs and CSOs who profess expertise on oil and gas, funded and/or founded by the oil companies or their host nations. We found out that many of the same technocrats are themselves mostly ignorant, as almost all did not understand what PSA entails, apart from being unaware about some crucial international documents and reporting standards, including those required by the United States Securities and Exchange Commission, (SEC), the Petroleum Commission, PAIC, and GNPC, etc. The select technocrats and the legal gurus with expertise, having purposely neglected to explain the problem to Ghanaians, deliberately lie to the other technocrats, or otherwise invent all kinds of fantastic tolis, shenanigans, and excuses, that are then conveyed to political leaders in small rooms and halls far from the warehouse where some of them keep the hoard of looted government procured implements like fertilizers, and illegal galamsey machinery that now have turned Ghana’s rivers, streams, and lands into useless water and dirt.
The latest shenanigan is the much hyped “energy transition”, being a keypin ruse to hasten the depletion of our hydrocarbon reserves by giving the FOCs more leeway and interests. Recall recent proposition by Mr. Egbert Faibile for Ghana to reduce its 15% participatory interest. They are now advising certain leaders, including Mr. John Mahama, to grant the FOCs more favourable terms to abet the plunder of Ghana’s oil reserves before they themselves retire. It is as if even the United States, United Kingdom, Germany, France, and the other highly industrialized economies directly responsible for climate change will themselves not use or need oil or petroleum products in the future, in 25 years, or more. What about ourselves?
That is a darn uninformed proposition if they actually believe half of the tall tolis they are now telling. On the contrary, allowed in the ground, depletable oil and gas will most likely continue to be even more valuable in the future, and presents minimal environmental risk/hazard. It would be better left in the ground than sold for a bargain and pithy “local content” media and professional services contracts for select elites. If quickly extracted and depleted in our own lives time there will of course by attendant risks of pollution and other potential issues during exploration, production and transport; and cost and risk to de-commission the oil wells, after wells are abandoned and the FOCs escape, such as sale/transfer to other parties and bankruptcy. In addition, quickly extracted, you do not then get to use improved technical processes and machinery, and new inventions, that could significantly reduce cost and risks of exploration, development, and production of oil and gas.
Maybe those technocrats think that if Ghana got very serious and properly planned, and GNPC was properly funded and supervised by other competent technocrats who have the nation more at heart than the current crop on the verge of retirement, that the GNPC and other existing governance structures could not evolve or acquire the same or more superior K-SAC in 10-15 years; or borrow money to fund investments just like Tullow Oil, a company founded by a single individual in Scotland barely 40 years ago, does/can.
Begs the other question!
Where are the reforms to the minerals sector recommended by Professor Raymond Atuguba in the report he submitted to the NDC the last time around? Zilch, we are sad to say. There is not an iota of reflection of any of that in our minerals laws. The recently signed agreement giving away again the newly discovered Ewoyaa lithium deposits to Atlantic Lithium of Australia, through Barari DV Ghana Ltd, is another sorrowful and pathetic case. Many Ghanaians and organizations, including the NDC, having “raised compelling concerns about the motives behind the lithium deal and potential negative impacts on Ghana’s resources and economy,” the new Mahama NDC government now has a chance to cancel that Akufo-Addo agreement. At the minimum, the NDC should serve notice and re-negotiate for better results for sovereign Ghana and posterity, and right the harms of the NPP government.
Mr. Mahama cannot continue as he did in the past with Kufuor’s illegal Jubilee Oil Field contracts of yesteryears that caused Ghana to end up with the garbage oil law in the first place. Mr. Mahama must stop the cycle of predatory plunder of national wealth in the name of accessing foreign investments for Ghana.
As we watch, blow whistles, and advocate for the FTOS-GH PSA Campaign as stridently as possible at the behest of our supporters in/outside Ghana, we reckon four (4) years to 2028 is a mighty short time for Mr. Mahama to count!
THE FTOS-GH PSA CAMPAIGN’S WHISTLEBLOWER CASE:
A major implication of the action taken by former Kufuor’s administration in signing a concession agreement and its approval by the Mills’ and Mahama’s administrations and MPs was the infringement of the statutory oil and gas PSA fiscal regime structure, we’ve discussed above. As we’ve noted, in as much as Ghana also invests, a robust PSA would have inured a fairer, more equitable share of revenues for Ghana, compared to the revenue-losing Royalty Tax System foisted on Ghana under the erroneous notion of creating a conducive climate to attract foreign investment. At the end of 2020, this had brought about the colossal loss of an estimated US$10 billion from Jubilee Fields alone. Besides that, the Jubilee Fields partners have also evaded corporate tax and royalty payments far exceeding the IMF bailout fund of US$3 billion, causing Ghana further losses of revenue. (Pun intended, the Concession system is not described as the “bastard system” for oil contracts for nothing).
A major drawback of Act 919, being essentially a Royalty or Concession system, is the evasion of taxes by the FOCs through all kinds of manipulations of the tax code such as the case now before the London arbitration court, commonly avoided under PSA with little planning and effort. In fact, under PSA, one can even avoid the hassle of collecting tax as an incentive to the FOCs. Therefore, in 2018, we drew the attention of the Ghana Revenue Authority (GRA) to tax evasion by the Jubilee Fields partners through a whistleblower complaint. When the GRA and EOCO failed to act, we went to court. Unfortunately, the GRA and Petroleum Commission were left out of the suit by our lawyers without our knowledge and informed consent. The Auditor General (then Mr. Daniel Yaw Domelevo) and the Attorney-General were rather sued, under an obscure, never used clause on the roles of the Auditor-General.
Sadly, in what to us is either a major defect of the Whistleblower law, or a judge gone haywire for whatever reason, a travesty, Justice Efia Serwah Asare-Botwe, the judge sitting on the case, decided to dismiss the case against the Auditor-General, which is part of the same government. Note that the whistleblower law says complaint can be filed at both, at Auditor General or Attorney-General. Judge Asare-Botwe accepted the Attorney-General’s excuse that they had handed over the case to EOCO to investigate. This is the same EOCO which had earlier been contacted by this Campaign with documents, leading to the head of the Large Frauds section rather losing his post.
On another level, from the experiences we had garnered, it was doubly perplexing that the lawyers at the Auditor-General’s office claimed absolute ignorance. In front of Justice Asare-Botwe, they claimed total ignorance of the petroleum sector and performance of related public agencies including the GRA in safe-guarding sovereign Ghana’s interests by doing their job. However, a cursory look at their work quickly revealed to us the following oil-and-gas interest reports, among many others:
1. Performance_Audit_Report_of_the_Auditor-General_on_the_implementation_of_Local_Content_in_the_Oil_and_Gas_Sector_of_Ghana (2016)
2. Report_of_the_Auditor-General_on_the_Consolidated_Statements_of_Foreign_Exchange_receipts_and_payments_of_the_Bank_of_Ghana_(BoG)_for_the_year_ended_31_December (2020)
3. Report_of_the_Auditor-General_on_the_management_of_Petroleum_Funds_for_the_financial_year_ended_31 (2020).
At this very moment, the issue of unpaid/uncollected tax revenues owed to Ghana by the FOCs has not yet been resolved, so we reserve further comments and actions at a later date and time of our choosing.
SUMMARY RECOMMENDATIONS & CONCLUDING REMARKS:
Fellow Ghanaians, clearly, we cannot continue in the old neo-colonial state we inherited from the colonial era that benefits a few collaborators on one side; and on the other side, their foreign, predatory sponsors they call investors, who now take over 80% of our wealth away to develop their own countries. Not to mention the capital flight our own collaborating elite indulge in out of our sight and national laws, including the opening of off-shore accounts and use of foreign companies as “tax havens”. We need a complete departure from the colonial era status quo in the minerals sector, and a robust PSA is the best option available on the table for Ghana’s oil and gas. It can even be applied in the other minerals sector as Minerals Production Sharing Agreement (MPSA), not only in the oil and gas sector. The idea is, properly integrated, “labels” denote “standards” which beget confidence in systems, including markets; and facilitates acceptance of risks on all sides. Ghanaians must not depend on the whims of any solitary “Energy Minister”, or hidden identities of beneficial owners operating off-shore, to award minerals contracts on behalf of sovereign Ghana. (The Table below is a summary of the FTOS-Gh PSA Campaign’s recommendations for implementation of minimum PSA fiscal standards for Ghana’s oil under 16 points):
| ITEM | GHANA OIL CONTRACTS: 16 PRESCRIPTIONS FOR STANDARD MINIMUM PSA FISCAL REGIME |
| 1 | Annul/amend Act 919. |
| 2 | Suspend all new oil contracts with immediate effect. |
| 3 | Require transparent, open-competitive bidding. Prohibit minister’s purview to over-rule process. |
| 4 | Require cash bonus for every oil/gas contract/lease. Establish MINIMUM $$$/Amount per Block. Add as part of open, competitive bid process. |
| 5 | Require royalty on gross production shall not be less than 12.5%. Peg to progressively increasing number of barrels. |
| 6 | FOC/contractor is entitled to a predetermined share of production, cost oil, for cost recovery, per site. |
| 7 | Profit oil will be shared between government (55%) and IOC (45%) at prespecified levels. |
| 8 | FOC/contractor pays statutory income tax on its share of profit and cost oil combined. |
| 9 | Surface rental income to be accumulated and saved, with interest, for decommissioning and pollution avoidance/mitigation, training, emergency, and public service equipment. |
| 10 | State participation interest shall not be less than 15% for any oil contracts signed during the next 5 years; goes to 20%, thereafter. |
| 11 | Additional Oil Entitlement (AOE) shall be replaced with Domestic Market Obligation (DMO) – government option to buy portion of contractor’s share at a price lower than the market price, and still at profit to FOC. |
| 12 | Ring-fence oil and gas activities. Prevent transfer of costs to or from non-related areas/activities/countries. |
| 13 | FOC/contractor will provide Ghana-specific report about intended CSR projects and actual expenditures, if any, and an annual report for transmittal to PIAC, GNPC, and Parliament on anniversary of the contract/deed. |
| 14 | Publish oil contracts and deeds as part of requirements for Petroleum Register within 30 days of approval. |
| 15 | Publish beneficial owners of oil contracts/blocks, as part of requirements for Petroleum Register within 30 days of approval. |
| 16 | Revise Model PSA and tailor to prescription 1 – 15. Post to GNPC, PC, PIAC websites as statutory minimum requirement for all petroleum contracts within 30 days of approval by Parliament. Post document to Petroleum Register within 30 days of approval. (Review every 5 years – approved by Parliament). |
| FTOS-Gh PSA Campaign, December, 2024 |
In closing, we agree. As enacted in 2016, Act 919 is a garbage oil law. Act 919 is a conspiracy hatched against Ghanaians from the corridors of Western powers in collaboration with a few Ghanaian elite technocrats and politicians who cannot show Ghanaians a single oil bonus payment since Ghana’s oil begun to flow in commercial quantities. Act 919 is a Nigeria-type 419 Royalty Tax Scheme, it is a fraud to rob Ghanaians of their sovereign oil and gas wealth in the name of attracting foreign investment. This is exactly what is happening, with the “Big Men” teaming up with a few Ghanaians and other foreign nationals who form off-shore companies with hidden ownership that Amin Adam decried a decade, and some ago.
How about continuing to invest in GNPC and other assets and following the Norwegian model of state corporatism that has so much enriched Norwegians. Clearly, the GNPC could be more easily supervised and controlled, compared to the FOCs.
Here is our warning. Just like gold, diamonds and other minerals that have been exploited under the royalty system for over a century without much evidence of the wealth created in Ghana, so shall oil yield for Ghana little development and wealth under Act 919, if not annulled, or severely modified to conform to a PSA. The revised PSA model when adopted must have minimum standards that are not subject to the whims and self-interests of solitary officials no matter their position of political affiliation because the resource/wealth belongs to the nation and the people. The reader is urged to compare Ghana’s Obuasi to South Africa’s Johannesburg. Again, we predict that the same dire conditions will happen with oil and gas unless Ghanaians receive a fair share of oil and gas revenues, to begin with. But, how Ghanaians spend the revenues is quite another matter. Nonetheless, Ghanaians should not be fooled by “Revenue Management” and the shiny trojan horse at bottom, such that the people completely neglect to ask the far more important question: Are we receiving a fair share of the oil revenues commensurate with sovereign ownership and control of own resources, in the first place?
The select few elites who drew up the “Hybrid System” agenda to create moneybags for themselves and their friends, then siphoned the funds to foreign off-shore accounts should know that the Nigerians first fought to replace their royalty system with joint ventures and then PSA. But who, in his or her sane mind, thinks that going the way of Nigeria is the best option to choose instead of following the advice of the Norwegians or Saudi Arabia, for instance?
Fellow Ghanaians, the time has come to revolt against the pernicious status quo that is the garbage oil law the then-Mahama NDC government, rabidly supported by the outgoing NPP honchos, enacted when they had power the last time. The Akufo-Addo NPP government having ignored the problem during the last 8 years even when they had Amin Adam as deputy energy minister, now is an opportune time for Mr. John Mahama and his NDC party to turn around the sad state and rectify his monumental mistake. Mr. Mahama must claw back all that they gave away 8 years ago/ He must stop the multi-billion dollar loses in oil revenues that still continue. It would serve their party’s interest and that of Ghana a lot better by implementing a more Ghana-centered Model PSA with mandatory minimum along the lines we’ve recommended.
REFERENCES & SOURCES
1. Guyana citizens to receive £370 each in payouts from ‘mind-boggling’ oil wealth, Nov – 07 – 2024, (https://www.graphic.com.gh/international/international-news/guyana-citizens-to-receive-gbp370-each-in-payouts-from-mind-boggling-oil-wealth.html).
2. Ghana’s Crude Oil Production Rebounds, (https://www.piacghana.org/ghanas-crude-oil-production-rebounds/).
3. Ndi, George (2017) Act 919 of 2016 and its contribution to governance of the upstream petroleum industry in Ghana. Journal of Energy & Natural Resources Law. pp. 1-27. ISSN 0264-6811, (http://eprints.hud.ac.uk/id/eprint/32508/).
4. Femi Akomolafe. The Monumental Tasks Before Mahama, Pan African Digest, Dec 17, 2024
5. Testimony of Mohammed Amin Adam, Executive Director, Africa Centre for Energy Policy, Ghana, “Is There an African Resource Curse?”. House Sub-Committee on Africa, Global Health, Global Human Rights, and International Organizations. 18th July 2013, (https://docs.house.gov/meetings/FA/FA16/20130718/101156/HHRG-113-FA16-Wstate-AdamM-20130718.pdf).
6. Solomon Kwawukume. Ghana’s Oil and Gas Discoveries: Towards Full Maximum Benefits. (The Little Green and Lime Book). Tema, 2012.
7. New Petroleum Exploration bill is recipe for corruption- Amin Adam,
(https://www.modernghana.com/news/541280/new-petroleum-exploration-bill-is-recipe-for-corruption-ami.html).
8. Ghana to have beneficial ownership register by end of 2017 – Dr Mohammed Amin Adam, (https://www.ghanaweb.com/GhanaHomePage/NewsArchive/Ghana-to-have-beneficial-ownership-register-by-end-of-2017-561996).
9. Aker Energy reveals paying US$125,000 to Joy FM Journalist annually,
(https://theheraldghana.com/aker-energy-reveals-paying-us125000-to-joy-fm-journalist-annually/).
10. Group accuses Dep. Minister of conflict of interest in award of oil block to A to Z Petroleum, (https://www.modernghana.com/news/539688/group-accuses-dep-minister-of-conflict-of-interest-in-award.html).
11. Juicy Oil Blocks Now For NDC Family and Friends | Politics,
(https://www.peacefmonline.com/pages/politics/politics/201404/197971.php).
12. Merely using a tax haven isn’t a crime, Ace Ankomah – By Prof. N. Lungu,
(https://www.africanewsanalysis.com/merely-using-a-tax-haven-isnt-a-crime-ace-ankomah-by-prof-n-lungu/).
13. Prof Lungu. REVISED: This Mahama-Dagadu-Buah 2016 E&P Bill is a Vulture Bill for Oil Companies!, (https://www.change.org/p/ghana-fair-trade-oil-share-psa-campaign-ftos-gh-psa/u/17158205).
14. Return to Oil Production Sharing Agreement – former GNPC Boss to government, (https://www.myjoyonline.com/return-to-oil-production-sharing-agreement-former-gnpc-boss-to-government/).
15. Andy C.Y. Kwawukume. A Day Of Betrayal And Shame, 2 Sep 2016 (https://www.modernghana.com/news/716721/a-day-of-betrayal-and-shame.html).
16. Minister Hot Over Tsatsu’s Oil Cash, 14 July, 2011, (https://reportingoilandgas.org/minister-hot-over-tsatsus-oil-cash/).
17. Arunima Kumar & Aby Jose Koilparambil. Kosmos Energy walks away from Tullow Oil acquisition, 17 December, 2024 (https://www.reuters.com/markets/deals/kosmos-energy-walks-away-tullow-oil-acquisition-2024-12-17/).
18. Ghana has made over $10bn from 633,300 barrels of crude oil since 2010 – PIAC, (https://www.myjoyonline.com/ghana-has-made-over-10bn-from-633300-barrels-of-crude-oil-since-2010-piac/).
SUBJECT: Ghanaians Need to Know About Ghana’s “Garbage Oil Law”, (Part 3)-rev.
AUTHOR: Fair Trade Oil Share-Ghana (FTOS-GH) PSA Campaign Ghana/UK/USA:
- Kofi Newman, Ph.D., MPA, MS – Land Use Planner, Policy/Management Analyst (Retired), USA.
- Andy C. Y. Kwawukume, Cand. Polit, U.K.
- J. Y. Fiebor, MBA – Finance, Univ. of Ghana Business School; Retired Senior Lecturer – Ho Technical University.
- CITATION: Cite this paper as: Ghanaians Need to Know About Ghana’s “Garbage Oil Law”, (Part 3)-rev; Newman, Kwawukume & Fiebor, FTOS-GH PSA Campaign, ©2024.
NOTE: This paper focuses on Ghana’s oil contracts, production, and revenues – actual and potential. No aspect of development and production of gas is directly addressed. However, as we have already noted, the primary issues apply to the larger Ghana minerals sector.