Business News of Thursday, 30 August 2018
The African Centre for Energy Policy (ACEP) is asking for an immediate review of existing petroleum agreements to ensure that companies which failed to comply with their minimum work obligations as required by law are sanctioned.
According to the energy think tank, a study it conducted in 2017 showed that only one out of 14 petroleum contracts met the minimum work obligation to continue to do exploration for oil.
The Executive Director of ACEP, Mr Benjamin Boakye, who said this noted that evidence from the study further revealed that the mandated state institutions did not do proper due diligence to guarantee that the oil companies had the capability to deliver on the agreements they signed with the government.
He was speaking at an experts’ forum on the petroleum contract governance in Ghana in Accra yesterday.
Participants in the forum were drawn from the Ministry of Energy, think tanks in the energy sector, oil marketing companies and petroleum companies.
The forum discussed developments in the upstream petroleum sector and the way forward to building a robust sector.
Mr Boakye explained that ACEP conducted and launched a petroleum contract monitor report in 2017 detailing the performance of 14 oil blocks in the country that were at the exploration stage.
“We realised that some of the companies did not show the technical and financial capacity to deliver on the agreement.
We engaged the Ministry of Energy and recommended an audit of the contracts.
“The ministry gave an assurance that the contracts were going to be reviewed such that the non-performing contracts would be cancelled in the interest of the state, but that has not been done.
Since 2014, there has been no exploration for oil in this country and we cannot continue like this,” he said.
He noted, however, that the petroleum register that had been launched and the passage of the general petroleum regulations were good steps that would promote transparency in the petroleum sector.
Mr Boakye observed that the current inactivity of the oil companies could be blamed largely on Parliament because the House failed to do due diligence before approving the contracts.
“It is Parliament that has the final seal on approval of the petroleum agreements so the members of the House ought to have spent time to peruse the agreements, ask the right questions and demand that the companies have the financial and technical capacity to do exploration,” he said.
A policy analyst at ACEP, Ms Linda Ahunu, said even though the petroleum register that had been launched by the Petroleum Commission was a major milestone towards ensuring transparency in the energy sector, it had major lapses that ought to be addressed.
For instance, she said the register did not include fees and charges, as well as a local content plan of contracts.
She also said the register failed to make provision for the disclosure of beneficial ownership, saying that more work needed to be done on the document.
The Chief Executive Officer (CEO) of the Chamber of Bulk Oil Distributors (CBOD), Mr Senyo Hosi, called the mandated state institutions to be more transparent in the implementation of policies in the petroleum sector.
“Majority of the petroleum agreements that were signed seemed not to be making progress with exploration because there was no transparency in the agreement process.
“People who do not have the right technical and financial capabilities to do exploration for oil have been engaged and that is why we are where we are now.
“There should be transparency along the value chain to make it possible for us to know who did a technical or financial audit and whether it was done right,” he stressed.
Mr Hosi advocated a quarterly report on petroleum agreements to bring transparency and sanctity to the petroleum sector.