Open letter to His Excellency Nana Addo Dankwa Akufo-Addo

1st March, 2017
Dear Sir,

Re: 10 Years into oil discovery, substantial governance gaps still remain

This year will mark the tenth year since the Jubilee oil field was discovered, and this is why we at the Civil Society Platform on Oil and Gas (CSPOG) believe your election as President of the Republic in this momentous year, affords us a unique opportunity to take stock of how well we have governed the resource thus far, and what lessons we may draw for making improvements in the years ahead.

It is for us, gratifying to note that your party’s 2017 manifesto makes a fundamental recognition of the:

1. Transformative potential of oil and gas;
2. The threat of “oil curse”;
3. The need for a more efficient allocation of exploration rights;
4. The need to add value to our oil exports;
5. The need for backward and forward linkages that help to integrate oil and gas into the rest of the national economy.                                                                                                                                                                                                                   

Regrettably, our analysis found that almost a decade after the Jubilee discovery we still do not have the full complement of the governance instruments required to efficiently manage the resource. Outstanding instruments include: Regulations to the E&P Act 2016 (Act 919); Completion of work on digital cadastral system by the Petroleum Commission, Finalisation of metering regulations and placement before Parliament to go through the process of passage, and Completion of work on the Strategic Environmental Impact Assessment for the Voltaian basin.

Other substantial governance gaps identified by the CSPOG analysis of the oil and gas sector are:

• Lack of integration of the sector into the rest of the economy;
• Weak regulation;
• Poor spending of oil revenues.

The details of the findings of our analysis are available on www.cspogghana.com and also contained in a report which we have dispatched to your office.

GNPC and its future
Though not covered in our report on the sector, we found, in the course of our analysis that, one of several factors impeding the growth and efficiency of our national oil company, the GNPC, has been excessive political interference and control of the entity. Recent example can be found in the manner in which the former government arm-twisted the corporation to provide guarantees for two floating power plants supplied by Karpower to augment national electricity generation capacity. The business case which is today cited in support of the deal was in fact, only an after-thought.

Another example is found in the lending of some US$50 million to the Ministry of Finance; an amount which was expected to be repaid in three months but has not been paid as of today, and which was not backed with appropriate documentation in spite of concerns raised by the Public Interest and Accountability Committee (PIAC) and the Ghana Extractive Industries Transparency Initiative (GHEITI).

Your Excellency, there is no denying the fact that GNPC holds great promise for Ghana’s quest to optimise benefits from the exploitation of its hydrocarbon resources. This makes the future of GNPC as a frontline company representing the interest of Ghanaians in the petroleum industry, something that your government would want to pay critical attention to.

Experience all over the world suggest that countries that have been able to do much with their petroleum are those who are either actively involved in the exploitation of the resources or are indirect participants through strategic share acquisitions in the companies exploiting the resources.

We therefore take this opportunity to humbly propose that your administration considered organising a national stakeholder consultation on the future of GNPC, similar to the Oil for Development Conference organised by former President Kufuor in 2008.

The purpose would be to build a national consensus on the long term goal of the corporation, agree on a more efficient financing model, and on the required restructuring to re-position the corporation in pursuit of its long term goal.

The restructuring, which will no doubt involve some changes in GNPC’s statute of establishment, should consider mechanisms for insulating the entity from needless and sometimes harmful political control. It should ensure that the CEO position does not become co-terminus with a particular political party regime as is the case now. A policy option will be to advertise the position and appoint on the basis of technical competence, business acumen, and proven integrity.

Appointment should be on the basis of a performance-based contract with concretely stipulated deliverables and measurable performance targets tied to negotiated remuneration.

CSPOG stands ready to engage with your government, particularly the Ministry of Energy and Petroleum to discuss these matters in detail, and to support your government to address these and other identified gaps as part of our support to your vision to unleash the full socio-economic potential of the industry.

Thank you.

Respectfully,
Dr Steve Manteaw
(Chairman, CSPOG)